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A PensionTrust Fund of the City of Orlando
COMPREHENSIVE ANNUAL FINANCIAL REPORT
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
FOR THE YEARS ENDED SEPTEMBER 30, 2007 AND 2006
TABLE OF CONTENTS
INTRODUCTORY SECTION Page
Certificate of Achievement for Excellence in Financial Reporting.
Letter
List
of
of
Members
Transmittal
of
Board
of
Trustees,
Staff,
and
Consultants
vi
vii
II. FINANCIAL SECTION
Report of Independent Certified Public Accountants on Internal Control over Financial Reporting and on viii
Report
of
Independent
Certified
Public
Accountants
Basic Financial Statements: x
Management's
Compliance
and
Disc~ion
Other
Matters
and
Analysis
"""""""""""""""""""""""""""
(Unaudited)
Required Supplementallnfonnation (Unaudited): 8
Notes
Statements
Statements
to
the
of
of
Financial
Plan
Changes
Net
Statements
in
Assets
Plan
Net
Assets
9
10
Schedule of Funding Progress """"""'"
19
Supporting Schedules: Notes to Trend Data
19
Schedule
of
Contributions
from
the
Employer
and
Other
Contributing
Entities
20
21
Schedules
Schedule
of
of
Administrative
Investment
and
Expenses
Consultant
Expenses
22
III. INVESTMENT SECTION
Equity, Fixed Income, Real Estate and Total Portfolio .. 23
Summary
Pension
Investment
Consultant
of
Performance
Target/Actual
Letter
Asset
Allocation
.. 24
.. 26
.. 27
Schedule
Schedule
Investment
List of Largest of
of Fees
Summary
Commissions Assets Held
.. 28
.. 29
.. 30
.. 31
IV. ACTUARIAL SECTION
Probabilities
Individual
Actuary's Pay
Certification of Rates of Retirement
Increase Letter
Assumptions Percent of Eligible Active Members Retiring Within Next Year. 33
Withdrawal
Summary
Summary
of
of
from
Actuarial
Benefit
Active
Provisions
Assumptions
Employment
Considered
and
..,
Before
Methods
for
Age
Actuarial
and
Service
Valuation
Retirement
"""'
Eligibility
,
34
35
38
38
38
39
Analysis
Solvency
Schedule
of
of
Test
Financial
Active
Members'
Experience
Valuation
Data
and
Retirants
and
Beneficiaries
40
v. STATISTICAL SECTION
Schedule of Average Benefit Payments Last Ten Fiscal Years
43
Schedule
Schedule
Schedule
Statistical
of
of
of
Section
Retired
Changes
Benefit
Contents
Expenses
Members
in
Net
Assets
by
by
Type
Type
Last
Last
of
Ten
Benefit
Ten
Fiscal
Fiscal
Years
Years
44
46
47
48
INTRODUCTORY SECfION
:fQLICE PENSIO N BOARD
March 15,2008
ChairmanJay L. Smith
and Police PensionBoard Members
City of Orlando,Florida 32801
We are pleased to submit for your review the Investment Section - includes the investmentactivity
ComprehensiveAnnual Financial Report (CAFR) for report, a summary of investmentpolicies, and reports
the City of Orlando (the City), Florida Police Pension related to investment perfonnance and various other
Fund (the Plan) for the fiscal years ended September investmentrelatedschedules.
30, 2007 and 2006. This report is a full and complete
disclosure of the structure and financial status of the Actuarial Section - contains the consulting actuary's
Plan. It has been prepared by the City's Finance Certification Letter as well as the results of the annual
Departmentin accordancewith accounting principles actuarialvaluationreport.
generally accepted in the United States. City
is
management responsiblefor the accuracyof the data
and the completeness and fairness of its presentation Statistical Section - includes trend information that is
(including all disclosures). considered statisticaland/orfinancial in nature.
This CAFR is divided into five sections. Thesesections Plan History and Description
are describedbelow:
A Special Act of the Legislature in 1943 createdthe
authority for the City's Police PensionFund. Chapter
Introductory Section - includes this Letter of 185 of the Florida Statutes(F.S.), which was initially
Transmittal, a description of the Plan's administrative enactedin 1963 to establishminimal requirementsfor
structure,a summary of major Plan provisions, and a local plans, defines standardsfor the organizational,
list of Board trusteesand staff. operationaland actuarialstructureof the Plan.
Financial Section - includes the Report of Independent to
Therehavebeenseveralamendments the SpecialAct
Certified Public Accounts, Management'sDiscussion since its passagein 1943. Subsequentamendments
and Analysis (MD&A), fi nancial statementsfor the have reduced the retirement age and increased the
Plan and certain required supplementaryinfonnation maximum pensionbenefits. The mandatoryretirement
relatedto the Plan. age was 60 with a maximum monthly pensionbenefit
of.$125 in 1945. Currently, normal retirementcan be at
The MD&A (starting on page I) summarizes the any age with a minimum of 20 years continuous
Statement PlanNet Assetsand Statement Changes
of of service.
in Plan Net Assets and reviews the changesfrom the
beginning to the end of the period and current year to A participant upon retirement will receive 70% of his
(in
the two prior years. The actual statements detail) average monthly salary with 20 years of credited
on
are presented pages8 and 9. Also presentedin the service with an additional 2% for each year of service
MD&A on page5 is a discussionof funding statusand beyond 20 years of credited serviceup to a maximum
a Scheduleof Funding ProgressFundedRatio showing of 80%. This benefit is in addition to Social Security
the currentand five previousyears. with no "carve out" provision.
Board of Trustees 400 South Orange Avenue, 4th Floor
lay .LSmith, ChRinnan DomIie R. Jones, EreCfltive Director
RebeccaW. Sutton, Vice-Chair P. O. Box 4990 Katrin4 l4udellUln, Deputy EreCfltive Dir.
Vince B. Montgomery, Secretary Rochelle (Shelly) L. Burlon, PmsiOll
Orlando, FL 32802-4990 Coordi/IRtor
Leon Singletary, Trustee
Kevin Edmonds, Trustee (407) 246-2603/246-2707 - fax
Participants have the opportunity to enter a Deferred The Board has a fiduciary responsibility to the Plan and
Retirement Option Plan (DROP). Any member who its participants and, as such, must exercise prudent
participates in the DROP will receive a lump sum judgment in its oversightand administrationof the Trust
payment for a portion of their accumulatedbenefit at Fund. The Board and supportstaff regularly participate
the time of their termination of employment. To be in educationalconferencesto keep themselvesabreast
eligible, the member must at least have completed21 of pension industry directional changes, technical
yearsof service. The membermay elect to back DROP concepts and approachesto plan management,plan
for up to 36 months, and must meet various other structure and asset management. Additionally, each
eligibility criteria. year for the past 20 yearsthe Board, in conjunctionwith
the Firefighter Pension Board and the General
Employees' Pension Advisory Committee, has
The Plan also provides a spousalbenefit and a Cost-of- participatedin an off-site, three-dayeducationalretreat
Living Adjustment (COLA). There is no actuarial where their consultants, money managers,and other
adjustmentto a retiree's benefit for the 75% spousal industry participants addresscurrent issuesin pension
benefit. The COLA is 2% per year beginningat age55. management.
Plan Changes
The Board meetsat leastquarterly with its Performance
MeasurementConsultant (the "Consultant") to review
For the fiscal year ending September30, 2007 there
the performanceof each manager,assetclass and the
were no plan changes.
fund investmentsin aggregate. When appropriate,the
Board terminatesexisting money managersand hires
Plan Administration or
replacement additional managers. When necessary,
the Board directs the Consultant to conduct an asset
Administration and responsibility for the Plan is vested allocation study (typically every three to five years)and
with the Board of Trustees(the Board). The Plan is a reallocationsof assetsare implemented,if appropriate.
single employer defined benefit plan covering all full- The Board reviews its asset allocation model on an
time City Police Officers. F.S. Chapter185requiresthe annualbasis.
Board be comprisedof five trusteesserving concurrent
two-year terms. By majority vote, trusteeselect from
among themselves a chairman, vice-chairman and The Board also evaluates disability retirement
secretary.Compositionof the Board is specifiedin F.S. applicationsand conductspublic hearingsto determine
Chapter185asfollows: if a permanent disability exists, if the disability is a line
of duty or non-line of duty disability and whether the
disability prohibits the participant from performing the
Two City residentsappointedby the City Council; necessary duties of the position within certain
Two Police Officers elected by a majority of the and
parameters conditionsof the Plan.
actively employedPlan participants;and,
One memberchosenby a majority of the other four Additionally, the Board employs an enrolled Actuarial
membersand ministerially appointed by the City Consultant (the "Actuary") to perform an annual
Council. actuarial valuation of the plan to determinethe funded
status, current funding requirements and to monitor
Three individuals serve the Board in staff positions. trends related to assumptions, expectationsand actual
These individuals serve in this capacity primarily as a results.
function of their normal position with the City.
Included in this group are the Chief Financial Officer,
City Treasurer,and PensionCoordinator. Funding of Generally, the Consultant and Actuary services are
reviewedperiodically and requestsfor proposalsissued
the latter position is sharedwith the Firefighter Pension
at leastevery five years.
Fund and GeneralEmployees'Defined Benefit Pension
Fund.
ii
Beyond providing staff support, the City generally The conceptof reasonable recognizes
assurance that the
providesthe following serviceson behalf of the Board: cost of control should not exceedthe benefits likely to
be derived. Reasonable assurancealso recognizesthat
valuation of costs and benefits require estimatesand
counseling;
Pre-retirement
Timely processing benefit claims;
of judgmentsby management.
and
Monthly processing distribution of
benefit checks;and All internal control evaluationsoccur within the above
Accounting and C"mancialreporting framework. The City's internal accounting controls
adequatelysafeguardassetsand provide assurance that
financial transactions are properly recorded. Key
BOARD ACTION controls are continually tested and evaluated by the
Accounting and Control Division of the Finance
During the year, the PensionBoard closely monitored Department.
the portfolio performance and target to actual
allocations. In March the Board afflrlned its existing
Budgetarycontrols are maintainedin the accountgroup
asset allocation mix. The Pension Board made a level within programor project appropriations. Trustee
manager change in the small capitalization growth related costs are budgeted annually. Benefits and
sector during fiscal year 2007. As of September30, refunds are not budgeted as they are considered
2007, the actual allocations were within appropriate
participant rights. Primarily, money manager and
target allocation ranges. The Pension Board was Master Custodian(the "Custodian") feesare considered
overweight on its Real Estate Investment Trust and investment costs. In the Investment Section, see the
equity investmentallocations, and was underweighton Schedule of Fees on page 29 and the combined
its bond investmentallocation at year-endto targeted of on
Schedule Commissions page30. Contributionsto
allocationranges. The Board doesnot currently plan to
the Plan are estimated annually as they represent
invest directly or indirectly in land development of
budgeted expenditures/expenses other funds. The
companies, foreign real estate, or provide venture Board has the authority to amendthe Plan's budget as
capital. At September30, 2007, the Plan's real estate necessary. During the year, no amendmentsto the
investmentsconsisted of publicly traded Real Estate Plan's budgetwere made.
Investment Trusts.
are
Assets.liabilities. revenuesand expenses recorded
For further details. see the target to actual allocation
using the accrual basis of accounting. Revenuesand
on
schedules page26. expenses are recorded when earned or incurred.
regardlessof collection or disbursement. The Plan is
FINANCIAL INFORMATION actuarially evaluated using the entry age normal
method.
Controls
Revenuesand Expenses
In developing and evaluating the Plan's accounting
system, consideration is given to the adequacy of Revenues essential to the sound funding of the Plan are
internal accounting controls. Internal accounting from contributions and net investment earnings.
controls are designed to provide reasonable,but not Contributions are made to the Plan from the following:
absolute,assuranceregardingthe following:
Budgeted City Funds - based on the actuarially
Safeguarding of assets against loss from determinedrates in accordancewith F.S. Chapter 112
use
unauthorized or disposition;and, of
and in consideration the insurancepremium;
of
Reliability and adequacy accountingrecords.
Allocated Property Insurance Premium Taxes -
received from the State pursuantto F.S. Chapter 185;
and.
iii
Active Plan Participants - based on a collective and at the fund managerdetail level. With the support
bargaining agreement, currently 1% of salary for of the custodianand consultant the Board will review
managementpolice officers, 2% of salary for non- the InvestmentPolicy periodically, establishthe proper
management police officers, 0.40% of salary to finance assetallocation mix for the Plan on an annualbasis,and
the 1988removal of the age47 requirementfor normal set specific performance objectives and specific
retirement, plus 3.33% of salary for the cost of the investment guidelines for each individual manager
COLA, and effective July 1, 2003, 2.74% of salary to based on state statutes and policy restrictions. The
financeDROP and other benefit enhancements. Board will monitor and evaluate risk and volatility
associated with the investmentsbasedon performance
benchmark expectations, policy limitations regarding
The actual return of 9.6% for the current year was
standard deviation,and sectordiversification.
slightly above the actuarial assumption of 8%.
Additional information about investment activity is
addressed in the MD&A (see pages 6-7) and in the Securitieslending is allowed under the policies of the
Investment Section of the CAFR. Plan expenses Plan. A contract allows the Plan's Custodian,acting as
include recurring benefit payments and administrative agent. to lend securitiesin the portfolio. For the year
costs. endedSeptember30, 2007, the Plan had net securities
lending income of $258,688 as comparedto $324,855
Market Smoothing 30,
for the previousyear. Through September 2007, the
City has never incurred a loss through its participation
In 1986, the Board adopted a market smoothing in this program.
approachfor actuarial assetvaluation purposes. This
approach spreads cyclical market variations over a OTHER INFORMATION
on
rolling four-year forward period as is demonstrated
page35. Independent Audit
Variations in investment return on an actuarial basis Florida Statutesrequire an annual independent audit of
from year to year reflect investmentgains and losses the Plan's financial statements.The opinion of Ernst &
and the effectsof market smoothing. Therefore,annual Young LLP related to the accompanyingstatements as
fluctuations in investmentreturn, as determinedin the 30,
of September 2007 and 2006 and for the Plan years
Actuary's annual funding calculations are not thenendedbasbeenincluded in this report.
necessarily indicative of good or poor investment
results for the current period. As of the most recent Services
ProCessional
valuation date of October 1, 2007 the Orlando Police
Officers' PensionFund is 96.5% funded basedon the Professionalconsultantsare appointedby the Board to
and
methods,assumptions data as of that date. This is perform professional services considered essential to
an increase from the prior valuation's funding the effective and efficient operationof the Plan. Letters
of
percentage 93.2%. The City and the PensionBoard from the Actuary and Consultant are included in this
haveadopteda funding policy that is more conservative report. The type of consultantsappointedby the Board
than that required by Florida law or GASB reporting and their respectiveexpensesare listed on page 22 of
requirements. This results in faster funding of the this CAFR.
Plan's liabilities and greater stability in required
contributionrates.
Reporting Achievement
Investments The GovernmentFinance Officers Association of the
United States and Canada (GFOA) awarded a
Certificate of Achievementfor Excellencein Financial
The responsibilityof oversightof Plan investmentsand
Reporting to the City of Orlando's Police PensionFund
policy-making decisionsis given to the Trusteesof the for its Comprehensive Annual FinancialReport (CAFR)
Police Pension Board. The Board meets quarterly to
30,
for the fiscal year endedSeptember 2006.
evaluatethe funds investmentperformancein aggregate
In order to be awardeda Certificate of Achievement,a
governmentunit must publish an easily readableand
efficiently organized CAFR, the contents of which
conform to program standards. Such reports must
satisfy both generally accepted accounting principles
and applicablelegal requirements.
A Certificate of Achievementis valid for a period of
one year only. The City has received a Certificate of
Achievement for the last eleven consecutive years
(fiscal years ended 1996-2006). We believe our
current report continues to conform to Certificate of
and
AchievementProgramrequirements, are submitting
it to GFOA to determine its eligibility for another
certificate.
Acknowledgments
This report reflects the combined efforts of the staff
from the Finance Department and the Divisions of
and
HumanResources TechnologyManagement well as
as Plan advisors and consultants. It is intended to
provide complete and reliable information regarding
for of
stewardship the assets the Plan. Additionally, the
report provides a basis for making management
decisions. The information can also be usedas a means
of determiningcompliancewith legal provisions.
On behalf of the Board of Trustees,I would like to take
this opportunity to expressour gratitudeto the staffs of
the Finance Department and the Divisions of Human
Resources (Employee Benefits) and Technology
Management involved in the compilationof this report.
Isb
y
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
September30, 2007
City Position.,
Jay L. Smith Chairman Elected Police Officer
Rebecca W. Sutton Vice-Chairman Appointed Chief Financial Officer
Vince B. Montgomery Secretary Elected Detective
Kevin Edmonds Trustee Appointed GeneralAdministrationDirector
Leon E. Singletary Trustee 5th Member N/A
STAFF
Staff Name Position City Position (2)
Rebecca W. Sutton Administrator Chief Financial Officer
Donnie R. Jones ExecutiveDirector Treasurer (3)
Katrina A. Laudeman DeputyExecutiveDirector Financial Analyst
Rochelle"Shelly" L. Burlon PensionCoordinator PensionCoordinator
LIST OF CONSULTANTS
Performance Measurement: Kalson & Associates Investment Consulting and
The Bank of New York
Custodian: The Bank of New York
Actuary: The SegalCompany
Legal Counsel: Robert D. Klausner, Klausner & Kaufman, P.A.
Notes:
(I) Members are elected for two-year terms ending September 30, every other year. The terms of the elected and appointed members commenced
30,
October I, 2006 and expire on September 2008.
(2) Individuals serve in their capacities primarily as a function of their various city roles. The Board shares the cost of one administrative staff
person (pension Coordinator) with the Firefighter Pension Fund and General Employees' Pension Fund.
(3) Donnie R. Jones became the City's Treasurer November 16, 2006.
Certificate of
Achievement
for Excellence
in Financial
Reporting
to
Presented
For its Comprehensive Annual
FinancialReport
for the Fiscal Year Ended
30,
September 2006
A Certificate of Achievementfor Excellencein Financial
by
Reporting is presented the Government FinanceOfficers
Associationof the United Statesand Canadato
governmentunits andpublic employeeretirement
systems whosecomprehensive annualfinancial
reports(CAFRs) achievethe highest
in
standards government accounting
and financial reporting.
c:2..l;:~ t,- ~. (:~>~
President
/J~~
~~~~-" ~
ExecutiveDirector
vii:
FINANCIAL SECTION
&
au ERNST YOUNG . Emit" Younl UP . Tel: (407)872-6600
1700
Suite Fax: (407) 872-6626
390 North Orange Avenue
Orlando. Fl32801-1671
Report of IndependentCertified Public Accountants
The PolicePension Board
City of Orlando,Florida
of of
We haveauditedthe statements plan net assets the City of Orlando,Florida Police Pension
30,
Fund (the PensionFund) as of September 2007 and 2006 and the related statements of
changesin plan net assetsfor the years then ended. These financial statementsare the
Our
responsibilityof the City of Orlando,Florida (the City)'s management. responsibilityis to
an
express opinionon thesefmancialstatements on
based our audits.
our
We conducted auditsin accordance with auditingstandards in
generallyaccepted the United
Statesand the standardsapplicable to financial audits contained in Government Auditing
Standards, issuedby the ComptrollerGeneralof the United States. Thosestandards requirethat
we plan and perform the audit to obtain reasonable assurance about whether the financial
are We to
statements free of materialmisstatement. were not engaged perform an audit of the
PensionFund's internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit procedures that are
but
appropriatein the circumstances, not for the purposeof expressingan opinion on the
of
effectiveness the PensionFund's internal control over financial reporting.Accordingly, we
no
express suchopinion. An audit also includesexamining,on a test basis,evidence supporting
and in
the amounts disclosures the financial statements, the
assessing accounting principlesused
and significant estimates and
madeby management, evaluatingthe overall financial statement
We
presentation. believethat our auditsprovidea reasonable basisfor our opinion.
in
As discussed Note 1, the financial statements presentonly the PensionFund and do not
30,
purportto, and do not, presentfairly the financialposition of the City as of September 2007
in
and 2006 and the changes its financial position for the yearsthen endedin conformity with
accounting in of
principlesgenerallyaccepted the UnitedStates America.
In our opinion, the financial statementsreferredto abovepresentfairly, in all materialrespects,
informationregardingthe net assets 30,
held in trust for pensionbenefitsat September 2007 and
2006 and the changes thereinfor the yearsthenendedin conformity with accounting principles
in of
generallyaccepted the United States America.
0803-0924722
A memberfirm at Ernst& '1bungGl(j)arUmited
vii i
&
ill ERNST YOUNG . & LLP
Ernst Young
In accordance with Government Auditing Standards,we have also issuedour report dated
24, of
January 2008 on our consideration the PensionFund's internal control over financial
reporting and on our tests of its compliancewith certain provisions of laws, regulations,
and and
contracts, grant agreements other matters.The purposeof that report is to describethe
of and
scope our testingof internalcontrol over financialreportingandcompliance the resultsof
that testing,and not to provide an opinion on the internalcontrol over financial reportingor on
compliance. That reportis an integralpart of an auditperformedin accordance with Government
and in the
AuditingStandards shouldbe considered assessing resultsof our audit.
Management's discussion and analysis and the schedulesof funding progress and contributions
from the employer and other contributing entities, and notes to trend data, listed under required
supplemental information in the table of contents, are not a required part of the fmancial
statements but are supplementary information required by the Governmental Accounting
Standards Board. We have applied certain limited procedures, which consisted principally of
inquiries of managementregarding the methods of measurementand presentation of the required
supplementary information. However, we did not audit the information and express no opinion
on it.
Our audit was conducted for the purpose Qf fornling an opinion on the Pension Fund's financial
statementsreferred to above. The introductory section, supporting schedules,and the investment,
actuarial, and statistical sections listed in the accompanying table of contents, are presented for
purposes of additional analysis and are not a required part of the fmancial statements. The
supporting scheduleshave been subjected to the auditing procedures applied in the audit of the
financial statementsand, in our opinion, are fairly stated in all material respectsin relation to the
financial statements taken as a whole. The introductory, investment, actuarial, and statistical
sections have not been subjected to the auditing procedures applied in the audit of the financial
statementsand, accordingly, we expressno opinion on them.
24,
January 2008
A member firm of Emst & ~<;iI~llimited
080~4722
ix
so ERNST YOUNG
& . Emit &. YOURS UP
Suite
1700
. Tel: (407)872-6600
Fax: (407) 872.6626
390 North Orange Avenue
Orlando, FL 32801.1671
Report of IndependentCertified Public Accountants on
Internal Control Over Financial Reporting and on Compliance
and Other Matters Basedon an Audit of the Financial Statements
Performed in Accordance with GovernmentAuditing Standards
ThePolicePension Board
City of Orlando,Florida
We have audited the financial statementsof the City of Orlando, Florida Police Pension (the
Pension Fund) as of and for the plan year ended September30, 2007, and have issued our report
thereon dated January 24, 2008. We conducted our audit in accordancewith auditing standards
generally acceptedin the United Statesand the standardsapplicable to financial audits contained
in GovernmentAuditing Standards, issuedby the Comptroller General of the United States.
Internal Control over Financial Reporting
In planning and perfonning our audit, we considered the Pension Fund's internal control over
financial reporting as a basis for designing our auditing proceduresfor the purpose of expressing
our opinion on the financial statements,but not for the purpose of expressing an opinion on the
effectiveness of the Pension Fund's internal control over financial reporting. Accordingly, we do
not expressan opinion on the effectiveness of the Pension Fund's internal control over fmancial
reporting.
A control deficiency exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent or detect
misstatementson a timely basis. A significant deficiency is a control deficiency, or combination
of control deficiencies, that adversely affects the entity's ability to initiate, authorize, record,
process, or report financial data reliably in accordance with generally accepted accounting
principles such that there is more than a remote likelihood that a misstatement of the entity's
financial statementsthat is more than inconsequential will not be prevented or detected by the
entity's internal control.
is
A materialweakness a significantdeficiency,or combinationof significantdeficiencies, that
of
resultsin morethan a remotelikelihood that a materialmisstatement the financial statements
or by
will not beprevented detected the entity's internalcontrol.
Our considerationof Internal control over financial reporting was for the limited purpose
in of
described the first paragraph this sectionandwould not necessarily identify all deficiencies
We
in internal control that might be significant deficienciesor material weaknesses. did not
identify any deficienciesin internal control over financial reporting that we considerto be
as
materialweaknesses, definedabove.
0803-0924722 A member firm of Ernst & Young Global Limited
x'
. Ernst &; Young LLP
Compliance and Other Matters
As part of obtaining reasonableassuranceabout whether the Pension Fund's fmancial statements
are free of material misstatement,we performed tests of its compliance with certain provisions of
laws, regulations, contracts, and grant agreements, noncompliance with which could have a
direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit and,
accordingly, we do not expresssuch an opinion. The results of our tests disclosed no instancesof
noncompliance or other matters that are required to be reported under Government Auditing
Standards.
This report is intended solely for the information and use of the Police Pension Board,
management,and the Auditor General, State of Florida and is not intended to be and should not
be used by anyone other than these specified parties.
24,
January 2008
0803-0924722 A member firm of Emst & Young Global Limited
xi
MANAGEMENT'S DISCUSSION AND ANALYSIS
(Unaudited)
MANAGEMENT'S DISCUSSION AND ANALYSIS
(Unaudited)
This discussionand analysis of the Orlando Police Pension Fund's financial performanceprovides an
ovemew of the financial activities and funding conditions as of and for the fiscal yearsendedSeptember
30, 2007 and 2006. Pleasereview it in conjunction with the transmittal letter (see pagesi-v) and the
FinancialStatementswhich beginon page8.
FINANCIAL HIGHLIGHTS
The Plan's net assets by
increased $44.58million (or 12.8%)as a result of the fiscal year's activities.
The required contributions from City, State (excluding In Excess of 1997 Frozen Amounts), and
in by
employeesources, total, decreased $0.68 million (or 4.4%).
Net investmentincome (including securitieslending) increasedby $18.18 million (or 65.0%) from
fiscal year 2005-2006to fiscal year 2006-2007.
by
Benefit paymentsincreased $2.72rnillion (or 19.2%)over the prior year.
PLAN HIGHLIGHTS
The strong performancein the equity markets in fiscal year 2006-2007resulted in positive investment
resultsfor the Police Plan. The portfolio's actual allocation was slightly over committed to both equities
to
and real estate(comparedto the target assetallocation),but underweighted bonds. The overall portfolio
the of
return of 13.8%exceeded actuarial assumption 8%, and outperformedits blendedbenchmarktarget
of 12.6% by 1.2% (see "Composite ReferenceFund" on page 27) as the result of the assetallocation
weightings.
The actuarially smoothedinvestmentreturn takes the differencebetweenactual return and the anticipated
8.0% return (for this year a $37.9 million gain) and allocatesone quarterto the current year and to eachof
the next three years. The impact of the actuarially smoothedpositive returns for fiscal years 2005, 2004
and 2003 partially offset the actuariallysmoothednegativereturnsfrom 2002 (seepage35).
The Plan's funding level increased from 93.2% to 96.5%, indicative that the fund remains"in a reasonably
well fundedfinancial condition (seepage5).
USING THE ANNUAL REPORT
The financial statements,which reflect the activities of the Police Pension Trust. are reported in the
of of in
Statements Plan Net Assets(seepage8) and the Statements Changes Plan Net Assets(seepage9).
are on
Thesestatements presented a full accrualbasisand reflect all trust activities as incurred.
of is
A discussionof the actualcomponents this annualreport, including the financial statements, presented
in the transmittalletter on pagei.
PLAN NET ASSETS
The table below showsa comparativesummaryof Plan Net Assets.
TABLE 1
PLAN NET AS SEIS
(in millions)
Cash & Cash Equivalents
Investrrents
Securities lending
Total Assets
Securities lending
Other Uabilities
Total Ualilities
Net Asse~ Held in Trust for
Pen..ion Benefi~ $, 392.10 s
.i 347.52 $, 317.51
of
For the current fiscal year 2007 there is a net increase $44.58million (or 12.8%)from the previousfiscal
year 2006. The previous fiscal year (2006) had an increaseof $29.95 million (or 9.4%) from fiscal year
2005. Both increases in
reflect net changes trust activities.
and
The securitieslending assets relatedliabilities provide equal and offsetting amounts,which indicatethe
portion of the Plan's investments 30.
that wereon loan asof September This equal and offsetting assetaOO
liability is a result of the accountingtreatmentof securitieslending and has no impact upon the financial
healthof the Plan. A specific security loan may be madefor a day up to severalweeksbut the collateral is
recalculated daily, to a minimum of 102%of value. As indicatedin the discussionin the notes(seepages
17-18),the lending processis availablethrough the Master Custodianand is invisible to both the Plan and
the individual moneymanager.
CHANGES IN PLAN NET ASSETS
in reflects the activities of the trust.
The following comparativesummaryof the changes net assets
TABLE 2
CHANGES IN NET' ASSEIS
(in millions)
For the Years EII~d
SePe~r 30,
2007 2006 2005
A(k)itions
Contributions
Employer $ 8.99 $ 9.84 $ 10.61
State 2.16 216 216
State-In Excess of 1997
Frozen Am:>unts .84
Plan Members 3.47
Plan MenDers Buybacks .04
Total Contributions
In~stment Income
Net Inco~ from
Investing Activities 45.88 71.63 31.80
Net In co Ire from Secu cities
Lending Activities .23
Total Net In~stment Income
Total Additions
Deductions
Benefits 16.~ 14.18 13.24
Refunds of Contributions .20 .00 .05
Administrative Expense .14 .12 .20
Salaries, Wages and Employee
Benefits .02
Total Deductions
Net Increase 44.58 29.95 35.64
Net Assets Held in Trust For Pension
Benefits:
Beginning of Year
End of Year
The fiscal year2007 securitieslendingprogramincomeof $258,688is lessthan the previousyear's income
in in
of $324,855due to a decrease lendablesecurities. This resultedin a decrease net income generated.
The fiscal year 2006 securitieslending program income of $324,855 was more than the previous year's
incomeof $233,458due to the higher volume of loan activity and improved spreadsbasedon demandfor
availablesecurities.
for
Contribution ratesare established participantsand the City and reflect the insurancepremium receipts
from the state. The state premiums collected and remitted are controlled by statute and the City's
:3
as
contribution, consideringand including the basestatepayment (established the 1998 collection for the
1997calendaryear), specifically matchthe actuarialdeterminedrate.
as
The Plan's investmentactivity, measured of the end of any month, quarteror year, is a function of the
for and
underlyingmarketplace the period measured the investmentpolicy's assetallocation (seebottom of
page26). The Plan's return showeda nice increaseof 4.2% from the 9.6% return in FY 2005-2006to a
13.8%return for the currentyear (seepage27) due to a morerobust equity market.
The benefit paymentsare a function of paymentsto retirees,their beneficiaries(if the retiree is deceased),
and new retirementsduring the period.
PLAN MEMBERSHIP
as
The following table reflectsthe Plan membership of the beginningand endingof the year.
TABLE 3
C HAN GIS IN PLAN MEMB FRS IDP
Sepe~r 30,
2007 2006 OIaDge
Active PartM::ipants 738 701 37
Vested 377 362 15
Non-Vested 361 339 22
Retirees & BenetlCiaries 4(:J) 446 14
Tenninated Vested 7 6
The following table demonstrates the changes in retirees and beneficiaries over the past year.
TABLE4
CHANGFSIN ~ & BFNE1'1CIARIES
Beginning (lCYl/2006) 446
Retire~nts & Beneficiaries 20
Death (Expiration) of Retirees & BenefICiaries (7)
Data Adjust~nts
&1dmg (9/3fY2007) 4W
Beneficiary payments,upon the death of the retiree (typically 75% of the retiree's benefit without any
may be divided 75% I 25% betweenthe spouseand minor children, until the child or
actuarialadjustment),
childreneachreachage 18.
FUNDING STATUS
Of primary concern to most pensionplan participantsis the amount of money available to pay benefits.
Historically, pensionplans have been ulKierfundedwhen the employer failed to make annual actuarially
requiredcontributionsto the Plan. The City has traditionally contributedthe annualrequired contribution
(ARC) as determinedby the Plan's Actuary. Therefore,a net pensionobligation (NPO) hasnever existed
4
for the Plan. This is due in large part to implementationof conservativebusinesspracticesand to the
funding requirements in
established Florida law.
In 1968. Florida becamethe first state to constitutionally require local governmentsto fund pension
obligations in a reasonable and systematicmanner. Additionally. F.S. Chapter 112 requireslocal pension
plansto be funded basedupon actuarial valuationspreparedin conformanceto industry standards and by
enrolled actuaries. To ensure this. the State has an actuary on staff. Each actuarial report must be
submittedto and acceptedby the State. Stateacceptance must be obtainedbefore the actuarial report and
its proposed contribution rate is authorizedfor use.
to
An indicator of funding statusis the ratio of the actuarialvalue of the assets the actuarialaccruedliability
(AAL). An iocreasein this percentage over time usually indicatesa plan is becomingfinancially stronger.
However. a decreasewill not necessarilyindicate a plan is in financial decline. Changesin actuarial
can in
assumptions significantly impact the AAL. Performance the stock and bond marketsalso can havea
materialimpacton the actuarialvalueof assets.
TABLE 5
SCHEDULE OF FUNDING PROGRESS
FUNDED RATIO
(as of October 1)
The actuary usesa four-year forward fair value sDK)Otbingmethod (seepages18 and 35) to establishthe
actuarialvalueof the assets 30.
(usedto determinethe fundedratio). As of September 2007. the actualFair
Value of Investmentsand Cash Equivalents without Reservefor Extra Benefits exceededthe Actuarial
Value of the Assetsby $45.39million asa result of the smoothingmethodology(seepage 14 in the notes).
s
ASSET ALLOCATION
The following table indicatesthe policy target assetallocation for September30, 2007 and 2006. The
Board affirmed the allocation in March 2007, but approvedthe InvestmentConsultantto perform an asset
allocationstudy on the fund.
TABLE 6
ASSEI' Au..oCA TION POLICY
(by%)
Se~nUr 30,
2007 2006
F.AJlity
Dc.ms tic S8% 58%
large Cap ValuelGowth ~ 23'11
Medium Cap VaJue/Gowth lS% IS'll
SmlllCapGowth 11% 11'11
International 9% 9'11
BONDS 3.s% ~
Aggregate 27% 27%
Mortgages 8% 8%
RFALESTA'IE 7CI, 1%
TOTAL l~ 1~
The 9% direct allocation to Internationalwas made to allow the Plan's passive(indexed) managerto also
and
hold internationalequitiesasappropriate, remain within the statutoryauthority of 10%maximum.
INVESTMENT ACTIVITIES
Investmentincome is vital to the Plan's current and continuedfinancial stability. Therefore,Trusteeshave
a fiduciary responsibility to act prudentlyand discretelywhen making Plan investmentdecisions. To assist
the Board in this area,a comprehensive formal investmentpolicy is updatedperiodically. As managers and
assetclasseshave beenadded,specific detailed investmentguidelineshave been developed,adopted,and
included as an addendumto each manager'sInvestment Advisory Agreement. The InvestmentPolicy
to or
Statementwas last amendedin June2<XX> incorporatechanges clearly addressstatutory requirements
adopted by the Florida State Legislature. The Policy generally follows Employee Retirement Income
Security Act (ERISA) private sector diversification guidelinesand is periodically reviewed, modified (if
and
necessary) ratified. Significant and atypical limitations (althoughrecently reduced)are placed on the
Board's investmentauthority by F.S. Chapter185.
Portfolio performanceis reviewed quarterly by the Board and its Consultant. Performanceis evaluated
individually by money managerstyle. collectively by investment type and for the aggregateportfolio.
real
Investmenttypesinclude both domesticand internationalequities.fixed incomeaOO estate.
6
TABLE 7
IN VES ~ REI'URN
SeI1e~r 30,
2007 2006
Rate Rank* Rate Rank *
F41ity
Portfolio Equities 19.4 % (29) 9.0 % (50)
S&P500 16.4 (55) 10.8 (39)
Universe Median 16.8 (SO) 9.1 (50)
Fixed Inco~
Portfolio 4.8 (W) 4.1 (36)
GJv't I Corporate Aggregate 5.1 (64) 3.3 (94)
Universe Median 5.3 (50) 4.0 (50)
Real FBtate
Portfolio 6.2 (46) 31.1 (11)
Universe Median 6.0 (50) 27.9 (50)
Total F\md 13.8 9.6
Universe Median 12.1 9.1
* Ranking was conducted within appropriate universe reflecting investIrent style.
The total fund investment performance for fiscal year 2007 on a relative basis to benchmarkswas
favorable, and the return of 13.8% was well above the long-term net 8.0% actuarial return assumption
target for the year. However, on a three-yearbasis the averagereturn of 11.7%wasslightly above the
benchmark,and on a five year basis the averagereturn of 12.6%fell slightly below the benchmark. The
occasionallower return is viewed, at this time, to be cyclical and the 8.0% assumptionis still deemed
in it
reasonable the long-term. However,as with all the actuarialassumptions, is monitoredannually.
A schedulereflecting five individual years,three year and five year averageperformance(with comparable
indexes)is availableon page27.
ECONOMIC FACTORS
One of the primary functionsof the pensiontrust is to manage investments prudently and effectively given
of for
variousconstraints. One key constraintis the performance availableinvestments the Plan. The table
on page 26 indicatesthe alternative index returns that were reflective of the market environmentduring
fiscal year 2007.
CONTACTING THE PLAN'S FINANCIAL MANAGEMENT
plan participantsand other interested
The financial report is designedto provide citizens,taxpayers, parties
with an overview of the Plan's financesand the prudentexerciseof the Board's oversight. If you haveany
questionsregarding this report or need additional financial information, pleasecontact the City's Chief
Financial Officer, 400 SouthOrangeAvenue,Fourth Floor, P.O. Box 4990, Orlando,Florida 32802-4990.
1
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
STATEMENTS OF PLAN NET ASSETS
September30,
2007 2006
Assets
Cashand CashEquivalents $ 368,012 $ 902,244
368,012 902,244
Investments,at Fair Value
Short-termInvestments 6,155,094 6,271,727
U.S. Government Obligations 24,627,350 38,002,901
FederalInstrumentalities 22,612,589 15,355,056
DomesticCorporateBonds 21,182,251 14,293,207
MortgageBackedSecurities 42,098,698 35,641,411
DomesticStocks 196,231,241 167,620,899
International Stocks 43,156,902 32,315,105
Real EstateInvestmentTrusts 34,766,892 36,351,489
AccruedIncome 1,240,604 1,191,002
Total Investments 392,071,621 347,042,797
SecuritiesLending Collateral 126.550.449 136.211,995
Total Assets 518,990,082 484,157,036
Liabilities
ObligationsUnder SecuritiesLending 126,550,449 136,211,995
AccountsPayable 336,854 418,837
Total Liabilities 126,887,303 136,630,832
Net AssetsHeld in Trost for PensionBenefits $ 392,102,779 $ 347,526,204
The accompanying notes are an integral part of the financial statements.
8
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
STATEMENTS OF CHANGES IN PLAN NET ASSETS
For the Years Ended
September30,
2007 2006
Additions
Contributions:
Employer $ 8,986,310 $ 9,844,035
State 2,155,329 2,155,329
of
State-InExcess 1997Frozm Amounts 840,979 894,133
Plan Members 3,664,741 3,484,572
Plan MembersBuyb3Cks 54,133 33,064
Total Contributions 15,701,492 16,411,133
Investment Income
From InvestmentActivities:
Net Appreciationin Fair Value
of Invesbnents 37,896,963 21,118,448
Interest 5,693,237 4,896,005
Dividmds 3,596,131 3,142,861
Total Investmeat Income 47,186,331 29,157,314
Invesbnmt Activity Expenses:
InvesbnentManagement Fees (1,250,615) (1,470,428)
CustodianFees (57,518) (57,189)
Total Investment Expenses (1,308,133) (1,527,617)
Net Income from Investing Activities 45,878,198 27,629,697
From SecuritiesLending Act;vh;es:
Securities Lending Income 6,514,795 6,162,444
SecuritiesLending Expmses:
Int~est Expense(Returnedto Borrow~) (6,170,987) (5,733,046)
Agent Fees (8S,120) (104,543)
Total Securities Lending Activities Expenses (6,2S6,107) (5,837,589)
Net Income from Securities Lending Activities 2S8,688 324,855
Total Net Investment Income 46,136,886 27,954,552
Total Additions 61,838,378 44,365,685
Deductions
Benefits 16,902,156 14,184,883
Refundsof Contributions 198,541 86,437
Administrative EXpC2lSes 143,206 125,342
Salaries,Wagesand EmployeeBenefits 17,900 17,180
Total Deductions 17,261,803 14,413,842
Net Increase 44,576,575 29,951,843
Net AssetsHeld in Trust For PensionBenefits:
Beginning of Year 347,526,204 317,574,361
End of Year $ 392,102,779 $ 347,526,204
notesare an integral part of the financial statemmts
The accompanying
9
CITY OF ORLANDO,FLORIDA
POLICE PENSIONFUND
NOTE 1 - SUMMARY OF SIGNIFICANT are
Benefit payments recognizedwhen due and payable
ACCOUNTING POLICIES in accordancewith the t~ of the plan (seeMonthly
Benefit Paymentspage 11).
of
The financial statements the Police PensionFund of
die City of Orlando, Florida (the "City") have been Contribution refunds are recognized when due and
prepared in accordance with accounting principles payable m accordance with the terms of the plan and
generally acceptedin die United States of America City procedures for terminations (see Refunds Paid
(GAAP) as applied to gov~tal units. The page 11).
Governmental Accounting Standards Board (GASB) is
the standardsetting body for governmentalaccounting
andfinancialreporting. CASH AND SHORT. TERM INVESTMENTS
The City maintains a cash management pool for its
REPORTING ENTITY cash, cash equivalentsand investmentsin which each
fund participates on a dollar equivalent and daily
The financial statementspresentedare only for the transactionbasis. Invesbnentearnings(which include
Police PensionFund of the City of Orlando,Florida and realized and unrealized gains and losses as well as
are not intended to present the basic financial interest inco~ ) are distributed monthly to the
state~ts of the City of Orlando,Florida. daily cash
individual fundsbasedon the funds' average.
balances.
The Police Pension Fund is included in the City's
Comprehensive Annual Financial Report (CAFR) for The Police PensionFund utilizes this cashmanag~t
the yearsendedSeptember 2007 and 2006, which
30, pool only for short time frames for nominal dollar
are separately issued doc~ts. Anyone wishing amounts associated with the deposit of
further information about the City is referred to the employee/employer contn"butionsor the pa~t of
CAFR for the respective years in which the Police benefits. The amountis generallylessthan one percent
Pension Fundhasbeenincluded. and
of the Plan assets the duration of the depositis less
thanone month.
The Police Pension Fund is a pension trust fund
(fiduciary fund type) of the City which accountsfor the of
The useof daily sweeps zerobalanceaccounts allows
singleemployerdefinedbenefit pensionplan for Police for the City's portfolio to be fully investedat all ~.
Officers. The provisions of the Plan provide for Florida Statutes(F.S.) provide for a deposit collateral
retirement,disability, and survivor benefits. pool by banks and savingsand loans that are qualified
public depositories which insure local govermnent
depositsandcertificatesof deposits.
BASIS OF ACCOUNTING
The City's cash management pool is treatedas a cash
it
equivalentfor reportingpwposesbecause functionsas
The Police Pension Fund is accountedfor using the
an internally managed mutual fund which alJows
accrual basis of accounting whereby revenues are
individual funds to, at any time, depositadditionalcash
recognized and
whenearned expenses whenincurred.
or make withdrawals without prior notice or penalty.
Employer contributions and any State of Florida
contnoutions eligIole to offset the employer
contnoutions are recognizedwhen due in accordance
with the State of Florida Statutes(see Contnoutions
page11).
Employee contn"butionsare recognized when due as
from pay.
deductions
10
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
INVESTMENTS INVESTMENT INCOME
Invesbnents reportedat fair value and are managed
are Realized and unrealized gaiIWlossesare recognized
by third-party ~ey managers. For categorization underNet Appreciation(Depreciation)in the Fair Value
purposes.all cash/short-terDlinvesbnentpositions held of Invesbnents.Securities in
Lending is discussed Note
in accounts managed the third-partymoneymanagers
by 3, pages17-18.
for the Plan are presentedas an invesbnent in the
appropriatesectorof that nmnager. The Police Pension
Fund'sindependent u.ster custodianand the individual EXPENSES
money managers price each instnlment (using various
third-party pricing sources) and reconcile nmterial
differences. Performance reporting, managerfees,and of in
As illusb'atedon the Statements Changes Plan Net
the pensionfund's assetvaluation are basedon quoted are
Assets,the required contn"butions substantiallyless
nmrketpricesprovidedby the CUstodian. than the combination of benefits and other expenses.
As a pensionplan matures,there co~s a time when
the
initially the earningsand S\Jbsequently corpusof the
trust will also be drawnto nmkethesepaynx:nts. Based
NET ASSETS on expenditureneeds,periodic draws may be required
from the custodianto pay theseobligations.
of
Net assets the Police PensionFund are the difference
betweentotal plan assetsand total plan liabilities and Monthly Benefit Payments
areheld in trust for pensionbenefits.
Monthly pension and disability benefit paymentsare
mailed/directdeposited day
prior to the last business of
for
the DX)nth that IOOnth.To ~ nxmthly obligations
CONTRIBUTIONS
the
(benefits, administrativeand other expenses) City
contributes approximately 1/12 of the employer
Contn"butiomof funds ale received from (1) The City contn"butions althoughstatelaw requiresonly
DX)nthly,
of Orlandoat actuariallydeterminedratesin accordance a mininmm of quarterly contn"butions. Monthly
with F.S. Chapter112,(2) the Stateof Florida, pursuant contributionsminimize the needfor substantial frequent
to F.S. Chapter 185, which allocates premium taxes drawsfrom the Custodian's pool of assets.
collected on certain casualty insurance preIlriums
written on property in the City, and (3) active plan
Refunds Paid
participants.
and
The PJanis contn"butory ~loyee contn"butions are
to
Pursuant a StatutoryPensionRevision (99-1), a base refundable (without interest) if, at the date of
1000/0
and
level of stateconbibutionswasestablished provides employment tennination, the ~loyee elects to
that excess conb1Dutions (an»unts above the 1997 temliDatehis vestingrights or is not vested
base)would be set asidein a separate tnlst to fimd to be
negotiatedbenefit changes/enhancements. While the
separate accountis treatedas part of d1ePensionFund,
as
it cannotbe considered availableto finance existing
benefits or to offset employer conb1Dutions. These
are
revenues classifiedas resbictednet assets. For the
30,
years ended September 2007 and 2006 the assets
resbicted for negotiatedbenefit changes/enhanc~ts
and
was$4,599,460 $3,758,482, respectively.
The City bas traditionally contn"buted the annual
required conbibution (ARC) and, thus, bas never had,
to
or needed report, a net pensionobligation (NPO).
11
CITY OF ORLANDO,FLORIDA
POLICE PENSIONFUND
Allocation of Sharable Cost of
members: the Plan, and a fifth memberchosenby a
majority of the other four membersand ministerially
Certain consulting fees (custodial and money by
appointed the OrlandoCity Cotmcil.
manag~t) are paid in arrears. Eachoftbese costsis
allocable between the City's three defined benefit
of
Although the assets the City's threepensionplans are
pension ftmds (including the Police, General
often commingledfor investmentpurposes, eachplan's
Employees' and Firefighter Pension Plans) in the
assetsmay be usedonly for the pa~t of benefitsto
following manner:
and and of
the members beneficiaries expenses that plan
in accordancewith the tenm of eachplan document
. Performance Measurement Consultant - These
fees, for services provided to all three pension
The Florida Constitution requires local governments to
boards by one consultant,are allocatedequally to
make the actuarially determined contn"bution to their
each defined benefit plan or on a project benefit
defined benefit plans. The Florida Division of
basis.
Retirc~ut reviews each local government's actuarial
. Custodian Serviees - Since these chargesarc a report prior to its being used for ftmding purposes.
function of the size and activity level, thesecharges Additionally, the State collects a locally authorized
are allocated based on the dollar value of each insurance premium surcharge for the Police Pension
plan'sassets a monthlybasis.
on Plan on casualty insmance policies within the corporate
limits. which can only be distn"buted after the State has
. Money Manager - These chargesare allocated
ascertained that the local government has 1Mt their
held
basedon the dollar value of eachplan'sassets actuarial funding requirement for the then DX)strecently
on
by the moneymanagers a quarterlybasis. completed fiscal year.
. Staff Support - One full-time staff person, the
Pension Coordinator, is dedicated solely to the The following scheduleis derived nom the actuarial
support of the Police PensionBoard, the General report and City information for the Police PensionFund
E~loyees Pension Board, and the Firefighters as of October 1, 2007; with regardto contn"butions for
PensionBoard. All costs related to this position fiscal year 2006-2007,City and Participants'Ratesand
are sharedequallyby the threeplans. Annual PensionCost are basedon the October 1,2006
actuarial report; Contributions Made are the actual
These and other shared costs (those costs not
contnoutionsfor fiscal year2006-2007:
specifically chargeable to an individual pJan) are
and to
addressed allocatedin a Imnner designed be fair
and equitableto all three definedbenefit pensionfunds.
These administrativecosts are financed by employer
to
contn"butions the Fund.
NOTE 2 - DESCRIPTION OF PLAN
GENERAL
The City nmintainsa single employer defined benefit
pensionplan for all full-time police officers, which is
as
maintained a pensiontnJstfund
The Special Act of the Florida Legislature (Chapter
22414, Laws of Florida, 1943),as amended from time
to ~, constitutesthe Police PensionPlan. This law
created dJe Orlando Police Pension Board which is
composedof five trustees. F.S. Chapter 185 requires
that this Board be comprised of: two City residents
appointed by the City Council, two police officers
elected by a nmjority of the police officers who are
12
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
NOTE 2 - DESCRIPTION OF PLAN - continued
ACCOUNTING I~LICIES AND PLAN ASSETS:
Authority SpecialAct Legislation
Basis of ACCOlDlting Accrual
AssetsValuation:
Reporting Fair Value
Actuarial Valuation Market Smoothing
Legal Reserves N/A
Long-Telm Receivable None
Internal /Participant Loans N/A
Non-gov~ta1 investmentin excessof 5% None
MEMBERSHIP AND PLAN PROVISIONS:
MEMBERS:
Active Participants 738
Vested 377
Not Vested 361
Retireesand Beneficiaries 460
TerminatedVested 7
NORMAL RETIREMENT BENEFITS:
Age N/A (1)
Years of Service(minimum) 20
Accroa1 - Less than 20 Years 2.0% (2)
20 Years 3.5% (2)
YearsOver 20 to 25 2.0% (2)
25 Years of Service 80.0% (2)
MaxjJm1In 100.0% (3)
Years to vest 10
COLA (annuallybeginning at age55) 2.0%
DROP N/A (4)
DISABILITY BENEFITS:
Line of Duty 80.0% (5)
Non-Line of Duty (maxjmwn) 60.0% (5)
CONTRIBUTIONS:
City (6) 26.63%
Participants 8.47% (7)
Annual PensionCost (millions) (6) $11.14
ContributionsMade (millions) $11.14
Q) NOImal Jairement is 20 yean ~ce at any age.
m Effective July I, 2003. the revised Police Pension Plans "NOImal" miJaJX'Jlt yields a 70% of "avenige month salary" pension bmdit
foc 20 yean of creditOOsavice (~aIs 3.5% per y~), additionalyean up to a ~m of 5 yean earnan additionalZ%for a
~mof80% with 25 yean ofcredital savice. Bd'oreJuly 1.2003,20 yeanof credital savice yieldftl a 60% pension benefit (3%
per y~). additional years up to a ~m of 5 yean earned an additional 4% for a maxilmm of 80% with 25 years. The Police Plan
provides for 2% accroaIs which are retroactively adjustal to the ~iva1ent of 3.5% per y~ when the participant reaches 20 years.
(3) A 100% pension is only available with 50 yean of credital savice. The participant earns an additional 2% for each y~ of credital
savice over 40 up to the maxiImIm 100%.
(4) The Dd'med Rd.iremtnt Option Plan (DROP) is a benefit which b~~ effective July I, 2003. AmcDiJer who elects to participate
~ves a lump ~m payment foc a portion of thejr accunmlatal bmdit at the time of thejr t=nination of emplo~t in ~change for
credital savice and a I8l11ced pension. s~ page 37 for a DX>redetailed ~p1anation.
(5) The City Police Pension Plan includes a specific disabilities provision within the pension plan prognun.
(~ The City contn"bution ~pressed as a percentage of the pensionable payroll that ~ates to the fixed dollar Actuarially R~iIed
Contn"bution as presental in the actuarial report datal SepIanber 30. 2006. The aty rate and cost foc the Police Pension Plan includes
an actuarially estimatal contribution from die State; the actual contn"botion ~ved from the State was $2.155,329. (~cluding excess
contributions which may not be used to offset the actuarial1y re(IUired amoont).
(7) This is the contn"bution for Non-managcment Police employees as pn:sented in the actuarial report. Police Management contribu tes
7.47%. 13
CITY OF ORLANDO,FLORIDA
POLICE PENSION FUND
NOTE3-INVESTMENTS Policy establishes IOOnitoring and reporting frequencies,
INVESTMENT PORTFOLIO perfolmance benchmarks for the aggregate portfolio,
sectors of the portfolio and for each manager, for both
short-tenn and long-tenn ~t periods. This
The Police PensionPian, as well as having separately Policy is updated periodically as needed and requires a
managedinves~t accounts,participatesin a pooled
thorough review at least once every five years.
investment portfolio which providesfor dollar-weighted
equivalent participation in both the inves~t return
and associated costs. The Inves~t Managers The following schedules reflect (a) the actuarialversus
retained by the Board have discretionary authority, fair value and (b) the typesof invesbnents held by each
within statutory and policy limits, to direct the manager style:
inves~ts of the funds allocated to individual
accounts establishedfor investment purposes at the As of SepenDr 30.
master custody bank. The Manager's authority over, (In 1boua ADm)
and accessto, the assetsof the Plan are limited to
and
directing the Custodianto executeplD'Chases sales
Total Actuarial Value
under "delivery va. payment" directives only, and for
the benefit of the Pensionaccountonly. Fa VakJeoflnves~ts and
Cash Equivalents with
Reserve for ~ Benefits 392.100 347,526
The Custodian for the Police Pension Plan's assets
Less Reserve for ~ Benefds (I)
maintains separatesub-accountsfor the City's three (4,599) (3.7S8)
pensionplans' assetswithin a Master Pooled account. Fair Value of InWI blwnts _d
Where the InvestmentPolicy is cormron anDng the Calb El,ilwlents \\Itbout
Rele~ r,.. t:xtra Benefic. (1)
three City pension plans, the assetsare generally co- 387,504 343,768
mingled for invesbnent by a COIlBJXm manager to Fair Value olln_~al5 and
achieveefficienciesin the executionof tradesand fees Cub Fqti~enl5 wthout
associated with the investment. However,the securities Re.erw for fitra Beaeftu
are allocatedon a unitized basis and accountedfor by Owr Total Actuarial Value $ 45.388 $ 33.346
the ~ter custody bank in separatesub-accounts for
each bUst fund Dividends, interest, capital (1) See the Contnbution section ofP.11 f« ~ infomation (XI
gains/losses,distributions, etc. are allocated by the the ReseJVe for ExtB Beaefits.
(2) 1nc1ude8AaxMmt. Rcceivabe 8td A~t8 Paylble.
on
Custodian a unit valuebasis.
Inves~t of the Funds' assetsby the various third-
are
party managers subjectto authority provided for by
F.S. Chapter 185, and restricted further by written
policy adoptedby the Board of Trusteesof the Fund.
Prior to October I, 1998, the statutegenerally limited
to
invesbnent securitieswhich are rated in the top three
rating categoriesby a "nationally recognized" rating
agency and are issued by entities "domiciled" in the
United States. As of October I, 1998,statutorylatitude
the
was provided which JOOdified rating constraint to
apply to only the fixed inco~ sector and provided
authority for inv~ of
of up to 100/0 the fund assets
in foreign securities. Furthenoore, the Board has
established a written Inves~t Policy addressiAg
limitations and latitudes by inve~ type (equity,
fixed inco~ and Real Estate) and by inves~t
categorieswithin types (corporate debt, retaiVoffice,
etc.). The detailedwritten Policy addresses limitations
regarding issues such as concentration of holdings,
volatility risk, credit risk, duration, allocation of
inv~t by sector, inves~ style, etc. Also, the
14
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
DISTRIBUTION BY INVESTMENT MANAGER STYLE (1)
(in thousands)
September 30,2007 SeiXember 30, 2006
-- -
Cash aad Cash and
Cash Cash
Eqalwleats In~tlmDts Total EquiwJeDts -Inwst.-atl
- Total
Style
Fixed IDcome
~ort Tmn s 21,522 s s 21,522 $ 4,098 s - s 4,098
Core 83,182 83,182 77,736 77,736
Mort~ 26,SSS 26.855 25,091 25,1»1
FAi8lty-lDdex hack
L8rF ~ ital Core 18,489 18,489 15.306
Mid ~ital Core 37,301 37,301
Mid Capital Growth 33,961 33,961 27.960
F.481ty-Aed w
~ ita! Value
Capital Growth
Mid Capital Value
Small ~ital Growth
International -
Real FBtate Inwstmeat Trusts
Aca"ued IDcome 1,241
Sub-total 22.763
Pooled Cab ~th City 368
Total S 23,131
PERCENT DI~UTION BY INVESTMENT MANAGER STYLE (I)
September 30, 2007 Se.-e_ber Jo, 1006
Casb and Cash and
Cash C..~
Equlwlents IDwstments Total f:Ai8lweDts laWstmeDts TM81
Style
F~~ 5.48% 28.04% 33.52-1. 1.18"- 29.55% 30.73%
Equity - Index Funds 0.00% 22.8"'" 22.87% 0.00-1. 12.4381. 12.438/.
Equity-Active 0.00% 34.94% 34.94% o.~ 46.28% 46.28%
Real Estate Inv~tnalt Trusts 0.00% 8.25% 8.25% o.~ 9.96% 9.96%
A ccnICd~ 0.32"- 0.00-1. 0.32-1. 0.34% O.ooeI. 0.34%
Poolcd Cash with City 0.1 C)8/e 0.00-1. O.l~ 0.26% O.ooeI. 0.26%
Total 5.~
(1) This ~heW1e reflects the allocation of investment by investment mana... style and not by type of investment as preRnted in the
of
statement plannet
IS
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
The allocation to investment in Real Estate is due to its participationthrough connningledinvestment
accomplishedthrough use of a specialty Real Estate vehicles.
Investment Trust (REIT) manager who actively
a
manages pool of publicly tradedREIT investments.
Credit Risk
The table below provides the credit quality ratings for
of
the fixed mco~ securities the Plan.
Foreign Currency Exposure
Se.-ember 30,2007
Eouities
Wellinuon international Growtb Portfolio
AustralianDollar N/A $ 435,609
CanaiianDollar N/A $ 485,024
DenmarkKrone N/A $ 480,127
Euro Currency N/A $ 8,133,447
HongkongDolJar N/A $ 1,084,014
Japanese Yen N/A $ 1,299,482
Norwegian Krone N/A $ 160,042
SouthKoreanWon N/A $ 159,820
SwissFranc N/A $ 1,366,482
Taiwan Dollar New N/A $ 235,946
UK Sterling N/A $ 4,798,378
Alliance Bernstein International Value EQuities
AustralianDollar N/A $ 512,115
BrazilianReal N/A $ 920,442
is
Eachportfolio manager subjectto quality constraints Brit~h Pound N/A $ 3,939,461
iliat is stated in their investment management CaIUkiian Dollar N/A $ 943,986
agreement Olinese Renn'inbi N/A $ 414,552
Euro N/A $ 6,730,35S
Hong Kong Do11ar N/A $ 39,212
Foreign Currency Risk IndianRupee N/A $ 136,144
The following table outlines the foreign currency Israeli Shekels N/A $ 7,553
exposure that die Plan is subjectto as of September 30, JapaneseYen N/A $ 3,786,703
2007. All of die invesbnentsbelow are managedby Philippine Peso N/A $ 27,543
drird party money managersin external invesbnent Russian Rubel N/A $ 151,807
pools. The Police Pension Plan Invesbnent Policy Sin~oreDollar N/A $ 91,626
Guidelines express die intention that die assets are South African Rand N/A $ 323,170
primarily large capitalization (in excessof $1 billion) South Korean Won N/A $ 1,365,906
widi no more than 200/0to be invested in a single Swedish Krona N/A $ 3,529
industry sector. It is also expectedthat no more than Swiss Franc N/A $ 205,040
5% of die portfolio is to be investedin an individual Taiwan Do lIar (New) N/A $ 836,850
is
equity issue. The moneymanaged further restrained Thailand Baht N/A $ 92,880
by their individual investmentpolicy already in place.
Cunently, die Plan's currencyrisk exposureis minimal Total 539,167.245
16
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
FIXED INCOME PORTFOLIO CHARACTERISTICS (1)
SD'TF:MBm. 30,2007
1 Total F1xedlnco~ (1) $ 110,520,888 5.061
-
Treasury Bills, Notes and Bonds
Treasury Inflation Protected Securities
-
Federal Instru~ta1ities 22,612,589 3.07
I ~rt282e BackedSeeurlties $ 42.098.698 4.771
G>vern~t National Mortgage Assoc. 1,104.2CXJ 3.25
Federal National Mortgage Assoc. 11,099,227 2.70
Federal Ho~ Loan Mortgage Corp. 15,151,397 3.37
Collaterati2ed Mortgage Obligations 11,742,913 935
Mortgage Pass Through Certificates 3,<XX>,871 2.13
I Domestic CorJX)rate Bonck $ 21.182.251 5.20 I
Bank Corporate Bonds 5,113,814 4.43
Other Financial Corporate Bonds 9,864,926 4.90
Indus trial Corporate Bonds 4,087,112 6.33
Fnergy Corporate Bonds 1,323,595 7.50
Telephone Corporate Bonds 613,481 3.38
Private Placenrnts 179,323 7.13
Notes
(I) Includes all fixed mco~ mvestnY:nts e~ept short termovemight
pooled cash.
Interest Rate Risk SecuritiesLending
The Plan DX)nitorsthe effective duration of its fixed The Board utilizes the service of its Custodian for
inco~ portfolio as part of its program to manage securities lending. The Custodian, acting as agent,
interestrate risk. The table aboveindicatesthe average lendssecuritiesheld in the portfolio and administersthe
effective duration of the portfolio in the aggregateand to
collateral custody. The transactionis transparent the
by security type. Inves~t Guidelines state die third-party managers who manage segmentsof d1e
duration of fixed income portfolio shall fall within a portfolio.
band of plus 35% to minus 40% of the duration on die
portfolio benchmark. The duration is monitored The market for securitieslending developedto provide
quarterly to insure compliance. Each individual temporary accessto a large portfolio of securitiesfor
portfolio may be subject to furd1er inves~t broker/dealers who might have a need to borrow
constraints that shall be detailed in guidelines specific instruments. The broker/dealercollateralizes
incorporated into their investment management their borrowing (in cashor with securities)to 102% of
agreement. the security value plus accrued interest and this
17
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
collateral (when in cash) is adjusted daily to ma,intain of
For accountingpurposes,the Statements PIan Net
the 102% level. If the broker/dealer fails to return the Assets and Cbangesin Plan Net Assets reflect the
security, upon request, then the Custodian, acting as increaseand/or decreasein assets,liabilities, interest
agent, will utilize the collateral to replace the security inco~, and expense with securitieslending
associated
borrowed The transaction establishes a rebate interest activities.
rate (assuming cash collateral), which is due back to the
broker/dealer upon return of the security. The cash is Determination of Actuarial Valuation
then invested short-tenn and the pension plans and the
custodian share in the incremental return available The Board has elected to employ a four-year forward
above the rebate rate. The short-tenn fixed income market smoothing approach with regard to asset
instruments can be invested in gov~t securities valuation for actuarial calculation purposes. This
(treasuries, agencies, instrumentalities), coDDnercial approach is designed to alleviate potential volatility that
paper, or corporate securities (rated ..A" or better), with
might otherwise be experienced under a pure market
a policy dollar-weighted, average maturity limit of less valuation. The changes in the realized and unrealized
than 30 days. While the securities loaned are on a market gains/(losses) for each year are spread over a
rolling daily basis and the cash collateral can be four-year period with one quarter being recognized in
deposited and/or withdrawn from the investment on a the current year and in each of the three succeeding
daily basis, the weighted average maturity of the periods.
investment at September 30, 2007 was IS days.
See page 35 in the Actuarial Section for the
The Board has authorized the lendmg of domestic Determination of Actuarial Value schedule which
bonds and equity securities. The Plan, as a prOgran1 the
denX>nstrates effect of the actuarial smoothingfor
participant, assumesthe risk that (a) the overnight 2006-2007and the two prior years,as well as to reflect
investmentwill not equal or exceedthe rebaterate, (b) the portion of the actuarialgain/(loss)to be recognized
the overnight investmentwill experiencea loss in fair in future years resulting from current and past years
value (i.e., principal), and (c) prior to entering into a experience
recent custodial agreement,the collateral will not be
sufficient if the borrower fails to return the security
back to the lendmg bank. As noted above, cash
collateral is invested in short-terDl fixed income
instruments. These investments are held by the 4
NOTE - CONTINGENCIES
Custodian. When non-cashcollateral is provided, the
collateral must be obligations issuedor guaranteed by LITIGATION:
the u.s. Government or its agencies and
instrumentalities.The Board cannotpledgeor sell these
the
During the ordinary courseof its operations, Police
of
obligationsin the absence a default by the borrower.
PensionPlan may be a party to various cla~, legal
The Plan would have credit risk if at anytimethe above
actions,and complaints. Thesemattersmay be handled
mentioned 102% daily adjustedcollateral falls below
by the City's Office of Legal Affairs or the Board may
100%. As of September30, 2007, the Plan had no
seekoutsidelegal counsel.
credit risk in its securitylendmgactivities.
In the opinion of the City's manag~t and legal
The Board periodically reviews d1e Custodian's
counsel, these matters are not anticipated to have a
practices to insure fair distribution of lending
material financial impact on the City or the Police
opportunities,as well as risk evaluationof prospective
PensionPlan.
broker/dealerborrowers. For 2006-2007 and 2005-
2006, the Plan received net income of $258,688 and
$324,855, respectively,from security lending activity
for its pensionportfolios. The decrease was the result
of a decline in lendable securities. This resultedin a
in
decrease net income generated.Through September
30, 2007, the pension plan bas not incurred a loss
throughits participationin this program.
18
REQUIRED SUPPLEMENTAL INFORMATION
(Unaudited)
This pageintentionallyblank
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
REQmRED SUPPLEMENTAL INFORMATION
(Unaudited)
SCHEDULE OF FUNDING PROGRESS(1)(2)
(Dollar amountsin millions)
Actuarial VAAL as a
Actual Actuarial Accrued Percentageof
Valuation Value of Liability (AAL)- Unfunded Funded Covered Covered
Date Assets Entry A2e AAL (U AAL ) Ratio Payroll Payroll
10/0112002 S 242.24 $ 255.45 $ 13.21 94.83 "/, $ 34.95 37.80 %
10/0112003 248.85 284.54 35.69 87.46 37.15 96.09
10/0112004 255.44 301.21 45.77 84.80 39.44 116.06
10/O1f200S (3) 211.88 30838 30.50 90.11 39.97 76.32
10/0112006 310.42 332.99 22.57 93.22 41.84 53.95
10/0If2OO1 342.12 354.67 12.55 96.50 44.81 28.01
SCHEDULE OF CONTRIBUTIONS FROM THE EMPLOYER
AND OTHER CONTRIBUTING ENTITIES
(Dollar amountsin nMllions)
Total Total
Year Annual Employer Annual State Annual Annual
Ended Employer Percentage State Percentage Required Percentage
9/30 Contribution Contributed Contribution (4) Contributed Contribution Contributed
2002 $ 4.36 66.97 % $ 2.15 33.03 % S 6.51 100.00 %
2003 6.50 75.14 2.15 24.86 8.65 100.00
2004 8.28 79.39 2.15 20.61 10.43 100.00
2005 10.61 83.15 2.15 16.85 12.76 100.00
2006 9.84 82.00 2.16 18.00 12.00 100.00
2007 8.99 80.70 2.15 19.30 11.14 100.00
(1) All six.~reconmx:nded tmldiDfomlationhasbeencalcu1ated using the Entry Age Nomlal ActIwial Method.
atoortization ~thod,
(2) Infonnation RgaJding contnoution percentage rates, 8SSUl11'tiou. etc. is explained in the Notes to Tmid Data on
the following page.
(3) Effective with the October 1, 2005 Valuation, as RCOnunendedin the October 1, 1999 - Septeniler 30,2004 experience study, the Actuary
changes:
made the following 8SSUl11'tions
.
.
The pre-Rtirement m3rtality table for healthy participants was changed to the 1994 Group Annuity Mortality Table.
The post-Rtirement m3rtality table for healthy participants RlUJuing on or after October I, 2005 was changed to the 1994 Group
.
.
Annuity Mortality Table. We maintained the 1983 Group Annuity Mortality Table for Rtirements prior to October I, 2005.
The m3rtality set forward for disabled RtiRes was changed from ten ~
The inftation component of the salary scale was changed from 5.5'1. per ~
to five ~
to 4.0"/. per~. An additional umt iIK:reaseduring
. the first ten ~
The assumed disability
of ~loYllK:nt was added.
rates were reduced by 20'10.
.
. The withdrawal rates were decreasedby 50% for both ultimate and ~lect service periods.
Retirement rates WeR nMJdified from age Rlated rates to service based Rtirement rates.
(4) The Annnal State Contribution column does not include the State Excess Over 1997 Fro~ Contributions which are Rserved for funding
enhancedbenefits and may not be used 10offset the actIIaria1ly requiOO contnoution.
1Q
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
REQUIRED SUPPLEMENTAL INFORMA nON
(Unaudited)
NOTES TO TREND DATA
FOR THE YEAR ENDED SEPTEMBER 30, 2007
in
The information presented the required supplementary was as
schednles deterDlined part of the actuarial
valuationsat the datesindicated. Additional information asof the latest actuarialvaluation follows.
Actuarial Valuation:
Frequency Annual
Latest Date 10/01/2007
Basis for Contribution 10/01/2006
Cost Method Entry Age Normtl
Amortization:
Method Level % of Pay
Open/Closed Closed
New PeriodPolicy
Oains/Losses IS Yrs
AssumptionChange 2S Yrs
Benefit Change 2S Yrs
Equivalent Single PeriodRemaining 8Yrs
Asset Valuation Method: 4 Year SD¥)()thed
Assumptions:
InvestmentEarnings 8. ()()8/0
mcreases:
Salary
h1flation 4.00%
Merit, Longevity, etc. The ~t and longevity component asswnptions reflect a gradation
to
basedon age,higher at }Oungerages,decreasing a mininuun armunt
near retire~t. at to
This rangeis 3.00/0 age20 decreasing 0.5% at
age45. For participantswith 10 ~ of serviceor less, salariesare
additionally ~d to increaseon a graduated scalewhich decreases
at at
&om 5.000/0 0 ~ars to 0.500/0 10 ~ars
MortaIityTable GA94 - Mortality Table for healthy, for the disabled,the healthiy life
m>rtalilty ratesare set forward 5 ~ effective for actives,inactives,
and retireeson or after October 1, 2004, effective October1, 2005.
For healthy retireesand beneficiariesin pay statusbefore
-
October 1,2004, GAS3 Mortality Table; for the disabled,the
healthiy life Jmrtalilty ratesare set forward I 0 ~;
to
changed GAS3in 1996. GAS4 was usedprior to 1996.
Re~nts by for
Probabilities of retiren:K1nt eliglole ~mbers are assigned ranges
of length of service,effective October 1, 2005.
Before October 1, 2005, probabilities ofretireJI.,nt by eligible ~mben
were assignedfor eachattainedage.
Turnover Probabilities of termination of e~l~t by
are assigned length of
serviceduring the first 5 ~ of emplo~nt and by attainedage
thereafter.
Post-Re~ Benefits Annual cost-<>f-livingadjustm:nt of2% beginningat age55 scheduled
for retire~nt after the imple~tation datein 1995.
20
SUPPORTING SCHEDULES
(Unaudited)
This pageintentionallyblank.
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
SCHEDULE OF ADMINISTRATIVE EXPENSES
FOR THE YEAR ENDED SEPTEMBER 30, 2007
(Unaudited)
PersonnelServices:(1)
Staff Salaries
Social Security
Retirement
Insurance
Total PersonnelServices $ 17,900
Professional Services:
Actuarial 30,500
Legal 46,016
Performance Measurement Consultant 43,320
Total Professional Services 119,836
Miscellaneous:
Supplies 225
Postage 488
Travel and Training 7.182
Other Professional Services 14.124
Other Services 1.351
Total Miscellaneous 23,370
Total Administrative Expenses $ 161,106
(1) PenomIeI 8en'ices expensesfor the PeDaon Coontinator are sharedby the Fi~fighter, Police and General ~loyees' Pen.on
FuDds.
21
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
SCHEDULES OF INVESTMENT AND CONSULTANT EXPENSES
FOR THE YEAR ENDED SEPTEMBER 30,2007
(Unaudited)
Expenses
Investment
Investment Managers:
Fixed Income $ 247,941
Equity 821,690
RealEstate 180,984
Total Investment Managers' Fees(1) 1,250,615
Other Investment Expenses:
CustodianFees 57,518
SecurityLending:
InterestExpense 6,170,987
AgentFees 85,120
Expenses
Total Investment $ 7,564.240
Paymentsto Consultants
List Fees Nature of Service
Actuary $ 30,500 Actuarial
InvestmentConsultant 43,320 Performance Measurement
(2)
Total Consultant Expenses $
(1) RealEstate~t feespaid ~ts paid
aDK>ut to theREI! equitymaDage1mDl
(2) TheActuary andIn~t Expenses part of theAdmiuistrativeExpenses page9.
Consultant are on
22
INVESTMENT SECTION
(Unaudited)
KAL50N & AssocIATES INVEsrMENr CoNSULTIN(
January24, 2008
Chainnan Jay Smith
City of Orlando, Florida
Police PensionBoard
400 S. OrangeAvenue,4th Floor
Orlando, Fl. 32801
Dear Chaimlan Smith:
Kalson & Associates has served as the pension consultant for the Police Pension Plan since 1993 and, as such, has provided
ongoing perforDlaDce measurements relating to the individual investment managers, each asset class component of the
investment portfolio, and for the investment portfolio as a whole. The Board strives to achieve a market rate of return as
measuredagainst appropriate benchmarks/indices,while limiting risk to an acceptablelevel. Kalson & Associatesrecommends
replacement of individual managersmainly when situations arise related to individual perforDlaDce,unacceptablechanges to
the investment managementfIrmS' organizational structure and/or the managers'substantive deviation from the investment style
for which they were hired.
As the schedule shows on page 26, the portfolio is broadly diversified by invesbnent type, as well as by sector and manager
style. This diversification serves to reduce risk that could result from concentration in single invesbnent categories. After
conducting an asset allocation study during 2003 and reviewing the targets in early 2007, the Police Pension Plan Board re-
confirmed the 2003 target allocations. The target allocation for the Pension Plan for fiscal year 2007 appearsin the "6/03 to
Present" column of the schedule. Note: In November 2007, a new asset allocation study was conducted and the new target
allocations will be present in the next CAFR report.
Performance is measuredand reviewed on a quarterly basis and accumulated for trailing annual periods, as well as for trailing
three and five-year periods. Although not part of this report, risk-adjusted performance is also measuredand reviewed. This
approach provides the Board with adequate detail to measure results and determine whether goals/benchmarksare being
achieved. The return is solely that of the Plan and not that of a composite. In addition, the performance method is basedon
monthly linking and when appropriate, intra-month linking, i.e., time-weighted.
The schedule on page 27 of this report was prepared by Kalson & Associates and representsthe pension fund perfonnance for
each of the past five fiscal years and the annualized returns for three-year and five-year periods. The performance of the total
fund for the year ended September30, 2007 was 1.2% above that of the benchmark composite reference fund and 1.1% above
that of the composite universe median. The main reason for the outperfonnance was the strong performance of the plan's
domestic and international equity managers. Annualized total fund performance for the trailing three-year period was 0.1%
above that of the composite referencefund and in-line with the composite universe median. Trailing five-year perfonnance was
0.4% per year below the return of the composite reference fund and 0.5% per year below that of the composite universe median
Relatively high REIT exposure favorably affected the total fund perfonnance, while selected domestic equity managers
underperformed.
The results have been acceptable given investment statutory constraints and substantial stock and bond market volatility
experiencedduring the three and five-year periods.
Sincerely,
Grant D. Kalson, CFA
o~
President
GDKlek
23
27 Blacksmith Road. Suite 201. PO Box 1300. Newtown, fA 18940.215-968-6851 .215-968-6605 Fax. ~mail; kalson@voicenet.com
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
INVESTMENT PERFORMANCE
EXPLANATION AND SUMMARY OF MATERIALS
INVESTMENT POLICY-BACKGROUND mSTORY (for the most recent 12 months):
BOARD ACTION:
The City has three pensionboards (Police, Firefighter
and General Employees), which have historically During the year, the PensionBoard closely monitored
utilized a similar investment policy statement. The the portfolio performance and target to actual
policy differences are generally related to strategy allocations. In March, the Board affimled its existing
constraintsplacedon the Police and Firefighter Pension asset allocation mix. The Pension Board made a
Plansinvestment authoritywhich until October 1, 1998, manager change in the small capitalization growdt
in
promoitedinvestment non-U.S.domiciled companies sector during fiscal year 2007.As of September30,
or lower rated securities. The investmentstrategyhas 2007, the actual allocations were adjusted within
been, althoughit is not required, to follow the general acceptable allocation ranges. Within theseranges,the
rules of Employee Retirement Income Security Act Plan was overweightedto its equity and Real Estate
(ERISA) (that guide the investmentof private sector InvesbnentTrust allocation and was underweighted on
pensionplans)which areprincipally: its bond invesbnent allocationat year end.
. Diversification - to spread the risk and limit Through the utilization of a Real Estate Investment
exposure to a particular type or group of Trust (REIT) inves1mentspecialist, the Board has
investments. achieved a broadly diversified investment portfolio
. The Prudent Person Rule - requiresthe trusteeto real
including n:M>st estatesectorssuch as Apamnents,
Retail and Indusbial, etc., with geographic
act as a fiduciary would in managinginvestments
diversification as well The Board does not currently
for a third party.
plan to invest directly or indirectly in land development
The Police Pension Board meets quarterly with its companies, foreign real estate, or provide venture
PerfomlanCeMeasurementConsultant to review the capital.
is
perfonnanceof the portfolio. Perfonnance evaluated
for eachindividual DXlney managerand collectively by For further details, see the target to actual allocation
types of investment: equity, fixed income and real on
schedule page26.
and
estate, for theportfolio in aggregate.
and
There were no materialamendments changes the to
Investment Policy Statement during the reporting
ASSET ALLOCATION STRATEGY period. The Investment Policy Statementwas last
amended during die 1999-2000 year to incorporate
changes or clearly address statutory requir~ts
In order to evaluatethe performanceand risk of the adoptedby the Florida StateLegislaturein June2000.
portfolio components and aggregate portfolios, the
by
Board closely ~nitors the allocation of assets type
(equity, fixed income,real estate,etc.), and style within A complete list of the Police Pension Fund Pooled
each type (value, growth, large capitalization,etc.) or Investments is available from the City of Orlando.
strategy utilized (industry rotation, duration or credit
risk, indexing, etc.). Periodically,the Board directsthe COMPARABILITY OF PERFORMANCE:
Consultant to perform an asset allocation study to
determine the optimal asset mix and strategies The scheduleon page 27 provides single, d1reeand
consideringthe risk attnDutesof various strategies and five-yearaverage comparative investment resultsfor the
given the statutoryconstraints. The scheduleon page is
Police PensionFund. Performance presented the for
26 presents history of the assetallocationstargeted
a by equity, fixed income,and real estatecomponents the of
the Board and the recent year-end actual asset portfolios and for the portfolio as a whole.
allocations.
The aggregate of
perfom1ance eachfund is compared to
the "Composite Universe Median," which is a large
group of pension funds investmentresults, constructed
,..4
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
INVESTMENT PERFORMANCE
EXPLANATION AND SUMMARY OF MATERIALS
to reflect the pension fund target assetallocation. As
indicated in the footnotes to this schedule, the
construction of the Composite Universe is adjusted
periodically to properly reflect investment allocation
policy parametersin place during the measur~nt
period. As an additional comparisonof performance, a
"reference fund" is constructed from appropriate
nationally recognizedindices in proportions to reflect
investment allocation policy parameters. The
constructionof this comparativereferencefund is also
adjustedperiodically to reflect appropriatepolicy for
the period of evaluation.
The Board's Consultantutilizes the Effron Performance
Measurement(EPM) calculations package developed
by Effron Entetprises,Inc., New York, in the reporting
to the Board. The calculationapplies cashflows on a
date of occurrence methodology basis. In the
calculation,returns are linked monthly to ~sure the
time-weighted total return. The underlyingconcepts for
this calculation were developed by The Bank
AdministrationInstituteand arean industrystandard.
The Consultantalso employsa Plan SponsorNetwork
(PSN) managerreturn universe when it comparesan
Orlando pensionplan managerreturn to a universeof
the
similar managers.Effron Associates, conveyorand
administrator of this data base, seeks to have its
thousandsof composite returns confonn to industry
standards.
The Police Pension Fund trailed its Composite
ReferenceFund benchmark for the trailing five-year
period by 0.7%, mainly due to the underperformance of
certain n:x>neymanagers.Severalmanagershave been
replaced in the past two years in order to improve
perfonnance. The Fund bas shown imprOVenlent by
outperformingthe benchmarkin the fiscal year 2007 as
well as on a calendaryear basis. As of September 30,
2007, the Real Estate componentbas underperformed
for the year even though it outperfomJedboth the
Equity and Bond componentsof the portfolio during
the
both the three and five year periods, demonstrating
benefitsof diversification.
Returnswithin the reporting and measure~nt periods
have generally been volatile as evidenced by the
Schedule"Market Indication of QuarterlyReturns."
2S
CITY OF ORLANDO, FLORIDA
POLICE POOLED PENSION PORTFOLIO
SUMMARY OF TARGET I ACTUAL ASSET ALLOCATION
(Unaudited)
,I Equitv 48.0 % 48.0 % 48.0 % 50.0% 55.0 %
S&P 500 (index) 15.5 4.0 4.3 4.4 4.7
Large Cap Value (index) 2.0 2.2 2.3 3.4
Large Cap Value (active) 12.5 12.5 12.0 14.0 8.0 8.2 8.7 7.6
Large Cap GnMth (active) 10.0 10.0 12.0 11.0 9.0 8.5 8.6 10.1
Medium Cap GnMth (index) 7.0 8.2 8.1 8.7
Medium Cap Value (active 10.0 10.0 10.0 15.0 8.0 8.7 8.1 8.2
Small Cap GnMth (active) 11.0 10.6 9.4 9.5
International(active) 9.0 9.3 9.3 10.9
I Bonds
Short-teRn (1-3 yrs.)
40.0 40.0 40.0 40.0
[IE m 283
Govt/Corp 30.0 30.0 27.0 23.2 22.8 21.4
MCMtgages 10.0 8.0 8.0 7.2 7.3 6.9
Convertibles
I RealEstate 12.0 12-:-0 10.0 II
- 9.5 10.0 8.3
~n-erMi8d
7.0
'-;
CIosed-ended 12.0 12.0 12.0 10.0
REIT 7.0 7.0 9.5 10.0 8.3
I Cash 0.1 1.2 0.3
ShOI1- T enn 0:1 1.2 03
Total ~% ~% ~% ~% J::QQ;[%~% ~% ~% ~%
MARKETINDICATION OF QUARTERLY RETURNS
SELECTED MARKET INDICES
FOR THE YEAR ENDED SEPTEMBER 30, 2007
Trailing
Year
10106. 1107. 4/07- 7/07- 10/06.
12/06 3/07 6/07 9/07 9/07
Stock Indexes
cap. ~hted)
s&P 500 Index (ma,1(et 6.7 % 0.6 " 6.3 % 2 .0 % 18.4 %
Russell 1000 Value Index 8.0 1.2 4.9 -0 .2 14.5
Russell 1000 Growth Index 5.9 1.2 6.8 4 .2 19.4
Russell 2000 Value Index 9.0 1.5 2.3 -6 .3 8.1
Russell 2000 Growth Index 8.8 2.5 6.1 0,
.0 18.9
EAFE (International)Index 10.4 4.2 6.1 2,.2 25.4
Bond Indexes
Lehman Bros. 1-3 Yr. Index 1.0 1.4 0.7 2.5 5.7
Lehman Bros. Govt/COI'pIntermediateIndex 1.0 1.8 00.1 2.9 5.4
Lehman Bros. Aggregate Index 1.2 1.5 00.5 2.9 5.1
Lehman Bros. Mortgage Backed Index 1.6 1.8 00.5 2.1 5.4
Real Estate Indexes
Russell-NAREIT 9.5 3.5 -9.0 2.8 5.7
26
CITY OF ORLANDO, FLORIDA
POLICE PENSION PLAN
EQUITY, FIXED INCOME, REAL ESTATE AND TOTAL PORTFOLIO
AS OF SEPTEMBER 30, 2007
(Unaudited)
Annualized Return
5 Years 3 Years
2007 2006 2005 2004 2003 2003-07 2005-07
Rate Rank Rate Rank Rate Rank Rate Rank Rate Rank Rate Rank Rate Rank
E.g.Y.i!Y.
Portfolio Equities 19.4 % (29) 9.0 % (SO) 14.3 % (76) 12.2 % (77) 28.7 % (35) 16.5 % (59) 14.2 0/0 (55)
Domestic Component 16.3 (53) 7.8 (52) 13.7 (74) 10.7 (78) 29.7 (28) 15.4 (76) 12.5 (83)
International Component 33.6 (17) 15.5 (88) 18.0 (99) 20.8 (67) 23.7 (77) 22.1 (63) 22.1 (67)
S&P 500 16.4 (55) 10.8 (39) 12.2 (87) 13.9 (69) 24.4 (59) 15.5 (79) 13.1 (77)
Dow Jones Industrials 19.0 (31) 10.5 (42) 4.8 (99) 7.7 (93) 22.3 (72) 12.6 (99) 11.3 (96)
Equity Universe Median 16.8 (SO) 9.1 (SO) 18.8 (SO) 17.4 (SO) 25.8 (SO) 17.2 (SO) 14.5 (SO)
Domestic Median 16.4 (SO) 8.0 (SO) 17.7 (SO) 15.9 (SO) 25.1 (SO) 16.8 (SO) 14.2 (SO)
International Median 26.5 (SO) 19.9 (SO) 26.4 (SO) 23.2 (SO) 28.4 (SO) 23.e (SO) 24.6 (SO)
FaxedIncome
Portfolio MarketableBonds 4.8 (90) 4.1 (36) 2.6 (27) 3.3 (59) 4.3 (66) 3.8 (SO) 3.9 (41)
GovVCreditComponent 4.8 (98) 4.1 (16) 2.4 (19) 2.8 (SO) 4.7 (51) 3.7 (16) 3.7 (75)
Mortgage Component 5.4 (29) 4.1 (91) 3.5 (29) 5.0 (34) 2.9 (88) 4.2 (62) 4.3 (45)
Lehman Brothers Aggregate 5.1 (62) 3.7 (71) 2.8 (25) 3.7 (36) 5.4 (38) 4.1 (26) 3.9 (41)
Lehman Brothers Gov't/Corp 5.1 (64) 3.3 (94) 2.6 (27) 3.3 (48) 8.5 (12) 4.2 (26) 3.7 (69)
Lehman Brothers Int. Gov't/Corp 5.4 (38) 3.5 (84) 1.5 (83) 2.7 (70) 8.0 (24) 3.8 (SO) 3.5 (90)
Lehman Brothers 1-3 Gov't 5.7 (11) 3.8 (55) 1.1 (99) 1.2 (99) 2.8 (96) 2.9 (99) 3.5 (90)
Lehman Brothers Mortgage 5.4 (40) 4.2 (34) 3.3 (20) 4.4 (18) 3.1 (85) ..1 (26) 4.3 (5)
SO-Day T -Bills 4.8 (90) 4.8 (1) 2.8 (25) 1.2 1.1 2.8 (99) 4.1 (14)
Bond Universe Median 5.3 (SO) 4.0 (SO) 2.0 (SO) 3.3 (SO) 4.9 (SO) 3.8 (SO) 3.8 (SO)
RealEstate
Portfolio
Real Estate 6.2 (46) 31.7 (11) 29.9 (45) 24.0 (90) 18.5 (99) 21.7 (72) 22.0 (17)
NAREIT 5.7 (53) 25.3 (63) 27.3 (79) 25.8 (82) 25.2 (71) 21.5 (76) 18.0 (76)
REIT Universe Median 6.0 (50) 27.9 (SO) 29.6 (SO) 27.5 (SO) 27.0 (SO) 23.2 (SO) 20.8 (SO)
Total Fund 13.8 9.6 11.8 9.9 18.2 12.6 11.7
Composite Reference Fund (1) 12.6 10.0 12.2 11.3 17.0 13.0 1t.'
Composite Universe Median (2) 12.7 9.1 13.5 13.1 17.2 13.1 11.7
Notes:
(1) Reference Fund is oomprised of a group of indices structured to represent a 49% allocation to domestic equity, 9% international equity, 35% fixed Inoome
and 7% real estate. The Reference Fund from 3/99 through 6103 was comprised of 43% domestic equity, 9% international equity, 41% fixed income
and 7% real estate.
(2) Composite Universe is composed of a group of funds structured to represent a 49% allocation to equity, 9% to international equity, 35% to fixed Income,
and 7% to real estate.
Manager Universe Sources
. Plan Sponsor Network for Broad Equity, FIXed Income. and REIT Universes.
. Ranking was conducted within appropriate universe reflecting index's style.
Performance Conventions
- Cash equivalents allocated to equity/fixed income portfolios were included in those respective portfolio returns.
- Total Fund retum Is not directly comparable to any specific universe; appropriate comparisons can be made to the Reference Fund and/or Universe
Median retums.
Methoooloex
- Time-weighted total return (see page 25)
27
CITY OF ORLANDO, FLORIDA
POLICE PENSION PLAN
LIST OF LARGEST ASSETS HELD
FOR YEAR ENDED SEPTEMBER 30, 2007
(Unaudited)
Largest Stock Holdings (By Fair Value) (1)
Shares Stock Fair Value
1) 27,239 SinK)IlPropertyGroup, Inc. (REl'I) $ 2,723,929
2) 34,011 ProLogis (REl'I) 2,256,6<K>
3) 45,813 Inc.
Verlzon Comnmnications 2,028,584
4) 50,602 Cisco SysteImInc. 1,675,444
S) 14,056 InternationalBusinessMachinesCOIp. 1,655,738
6) 18,168 Con~hillips 1,594,592
7) 54,690 DiscoveryHolding SeriesA 1,577,793
8) 2,691 GoogleInc. 1,526,702
9) 13,632 Varnado Realty Trost (REl'I) 1,490,683
16) 9,675 Apple Inc. 1,485,523
(1) Excludesco-mingledequity funds.
Largest Bond Holdings (By Fair Value)
Par Bond.. Coupon Maturity Fair Value
1) S 5,714,280 FederalH~ Loan M<X1gage
c<xop.
Group 6.500 % 08/01/2036 $ 4,561,193
2) 3,831,382 United StatesTreasuryNotes 4.625 07/31/2012 3,898,124
3) 3,141,439 United StatesTreasuryNotes 4.000 02/15/2015 3,056,275
4) 2,576,274 FederalNational MortgageAssoc. 7.250 01/15/2010 2.733,266
S) 2,369,384 United StatesTreasuryBmds 5.375 02/15/2031 2,536,352
6) 1,908,351 United StatesTreasuryBmds 7.875 02/15/2021 2,475,787
7) 2,858,233 FederalNational M<X1gageAssoc.Pool 6.500 ~/O1/2036 2,401,142
8) 2,811,535 FederalH~ l.oan M<X1gage Group
c<xop. 4500 06/01/2021 2.282.886
9) 2,154,205 FederalNational MortgageAssoc. 6.(xx} 05/15/2008 2,169,689
10) 2,592,453 FederalHome l.oan MortgageCOip.Group 4.500 06/01/2021 2.159,922
Note: A completelisting of inves~nts are availableupon requestfrom the Office of the Chief Financial Officer.
28
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
SCHEDULE OF FEES
FOR THE YEAR ENDED SEPTEMBER 30, 2007
(Unaudited)
AssetsUnder
M8n8~ement Fees
Investment Mana~rs:
Fixed Income $ 111,033,119 $; 247,941
Equity 247,428,934 821,690
Real Estate 32,soz,630 180,984
Overnight InvestUlC'lt ACCO\D1t 1,106,938
Sub-total 392,071,621 1,250,615
Pooled Cash with City 368,012
Total As ets and Fees (1) $ 3~~~39.633-
Other Investment ServicesFees:
Custodian ,57,,518
SecurityLending:
Agent 85,120
Total Fees $
(1) RaI P.ule_g~ Cas~~ ~.-id -ga".
IodieRErr CMlUity
29
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
FIREFIGHTER, POLICE AND GENERAL EMPLOYEES' PENSION FUNDS(l)
SCHEDULE OF COMMISSIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2007
(Unaudited)
Number of Total Conunissiom
Brokeraee Firm Shares Traded (,~nunis.~ions Per Share
Abd. N~ COIponItion 902,816 14,367 0.02
Avondale Partners, LLC 40,838 1.634 0.04
Banc/ADBica Secur. LLC, Monlgom 164,180 6,211 0.04
Bear Steams & Co Inc 177,595 7,110 0.04
Blair William & Company LLC 75,130 3,005 0.04
BMO Nesbitt Bums Corp 31,383 1,255 0.04
BNY Brokezage Inc 130,649 4.979 0.04
Broadcort Capital Corp-Sub Of 29,595 1,184 0.04
B- Trade Sel"oicesLLC 297,503 4,778 0.02
Cantor, Fitzgesald & Co., Inc 100,131 3,924 0.04
Citation GJOOp/BccCIzg 1,917,213 57,268 0.03
Citigrrop Global Markets Inc 443,647 14.626 0.03
Conifez Securities LLC 122.056 4,159 0.03
Cowm & Co LLC 43,640 1.746 0.04
C~t Suisse F~ Boston 76,473 1.962 0.03
Davidson D.A& Co Inc Nscc 47,081 1.883 0.04
Dwtsdle Banc/ Alex Brown 110,318 4.521 0.04
Dilm Trading Institutional I 37,600 1.504 0.04
Edwards, AG., & Sons, Inc. 56,973 2,279 0.04
First Clearing, LLC 62,230 2,489 0.04
Friedman, Billings & Ra~y 81,320 3,253 0.04
Goldman Sachs & Co 1,787,456 41,975 0.02
Imperial Capital LLC 26,840 1.074 0.04
lnstinaCorporation 475,227 9,362 0.02
Inv~ Technology GJOOp 600,620 13.059 0.02
J P Morgan Securities Inc 67,604 1.768 0.03
Jefferies & Company, Inc. 1,004,074 30,286 0.03
JonesTrading Inst Svcs LLC 28,378 1,087 0.04
Knight Securities 119,493 2,655 1>.02
LabrancheFinc1 Svc Inc/HBI 78,391 3,030 0.04
LdIm8n Brothen; Inc, Usa 330,181 12,685 0_04
Iiquidna Inc 384,976 10.193 0.03
MenillLynchPieccePaU1er&Smilh 412,581 15.123 0.04
M~an Stanley & Co 309,340 6.480 0-02
Next Gmezation Equity R~ 197,680 5.507 0.03
Oppenhej~ and Co Inc 36,760 1.470 0.04
Pacific Crest Secs 30,236 1,210 0.04
Pessbing & Company 107,600 4,304 0.04
Piper Jaffray & Co 39,870 1.595 0.04
RBC Capital MaJiets Corp. 30,848 1,234 0.04
Robbins and Henderson LLC 52,545 1.850 0.04
State St Brokezage Sel"oiceInc 3,962.456 45.875 0.01
State St Global MaIXets LLC 545,646 6.848 0.01
S(eP1ens,Inc. 304,008 9,291 0.03
Sterne Agee & Leach Inc 71,956 2,878 0.04
Stifd Nicholaus & Co, Inc 58,183 2,327 0.04
Thomas W cisel Partnen; LLC 36,375 1.455 0-04
UBS Securities LLC 243,117 8.949 O.M
Wachovia Secs Capital Market 65,819 2.633 0.04
All other ConmIissions (2) 7,493,427 19.589
Total 23,850,058 $ 409,929
$~
(1) Data DOtavailable foc iIKlividual rums.
(2) Brokesageconunissionspaid per fino dlat were lessdiaD $1,000 and ranged from $4 to $934 and conunissiom on boIKlstotaling $4,854
30
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
INVESTMENT SUMMARY
SEPTEMBER 30, 2007
(Unaudited)
Percentof
Fair Value Total
September30, 2007 Fair Value
Type of Investment
Fixed Income:
U.S. GovernmentObligations $ 24,627,350 6.27 %
Feder tali
alln strumen ties 22,612,589 5.76
DomesticCorporateBonds 21,182,251 5.40
MortgageBackedSecurities 42,098,698 10.73
Total Fixed Income 110,520,888 28.16
Common Stock:
Capital Goodsand Services 9.367.594 2.39
Co-Mingied Equity Funds 13.135.708 3.35
Co-Mingied International Stock 43.156.902 11.00
ConsumerDurableGoods 3.825.456 0.91
Consumer Non-Durables 28.763.793 7.33
Energy 15.003.941 3.82
Financial Services 26.421.955 6.73
Materials and Services 54.557.514 13.90
Miscellaneous 978.416 0.25
Technology 31.120.787 7.93
Transportation 3.247.144 0.83
Utilities 9.808.933 2.50
Total Common Stock
Real Estate Investment Trusts:
Real Estate 34,766,892 8.86
Total Real Estate Investment Trusts 34,766,892
Short-Term Investment:
Cashand CashEquivalents 20.417.500 5.21
Short-TermInvestments 11.817.731 3.01
Total Short-Term Investment 32.235.231
Receivables& Other:
PendingTradePurchases
PendingTrade Sales
AccruedIncome
Total Receivables
Investments Sub-total
PooledCash with City
Total
31
ACTUARIAL SECTION
(Unaudited)
THE SEGAl COMPANY
2018 P(1tWfS Feny Road. Suite 850 Atlanta. GA 30339-5003
T 678.306.3100 F 678.306.3190 www.segalco.com
January24, 2008
The Board of Trustees
City of OrlandoPolice Officers' PensionFund
Orlando. Florida
Dear Trustees:
Thefunding objective of the Pension Fund is to establish and receive contributions which, expressedas percents of
active memberpayroll, will remain approximately levelfrom generation to generation of Orlando citizen.5.
Contributions which satisfy the funding objective are determinedby the annual actuarial valuation and are sufficient to
provide for nonna) cost plus level percentof payroll fmancing of unfundedactuarial accruedliability (VAAL).
30,
The most recentactuarialvaluation was completedas of September 2007. RemainingVAAL was amortizedas a level
percent of payroll over periods ranging from 1-23 years. The actuarial assumptionswere set forth in Section IV of the
30, in
September 2007 valuation report. The following schedules the Actuarial section were preparedsolely by our firm
or in conjunction with City Staff: Detennination of Actuarial Value, page 35; Withdrawal from Active Employment
before Age and Service Retirement Eligibility, Individual Pay Increase Assumptions, Probabilities of Rates of
Retirement, page 38; Scheduleof Active Members Valuation Data and Retireesand Beneficiaries, page 39; Solvency
Test, page40; and Analysis of Financial Experience,page 41. The Actuary in the September30, 2007 valuation report
provided trend data schedulesrelated to the Pension Fund. The following trend data schedulesrelated to the Pensjon
Fund in the financial section were not prepareddirectly by the Actuary, but were developedby the City Staff through
combining or extracting data from the Actuary's October I, 2007 valuation report: Scheduleof Funding Progress Funded
Ratio (graph), page 5; Scheduleof Funding Progress,page 19; and Notes to Trend Data, page 20. We believe the
assumptions and methodsproduceresultswhich are reasonable set
and meet the parameters by StatementNo. 25 of the
GovernmentalAccounting Standards Board~
and
Data for the annualvaluation was furnished by the City of Orlando and was checkedby us for internal completeness
year-to-year consistency. Valuation assetswere based on a smoothed market value which recognizes realized and
unrealizedgains and lossesover 4 years.
On the basis(if the 2007 valuation, it is our opinion that the Pen.\'ionFund continues tofund its pen.\'ionobligations in
a manner con.\'istentwith the abovestatedfunding objective,with generally acceptedactuarial principle.\"and practices
and with the requirementsand intent of Part VII, Chapter 112, Florida Statutes.
Sincerely,
--:;;~ ;;;;?-/ . g" &-- ~..4.:=
Leon F. (Rocky) Joyner,Jr. K. Eric Freden.FSA, MAAA
Vice Presidentand Actuary Enrolled Actuary No. 05-0553
6162297vl~1391001
88fI8fIts. Compe.-tion 8nd HR c-uIIing ATlANTA ~ CALGARYCt«:AOO a.EVELNCI [ENIIER ~ 1QSTc-. LOSAN3ELES
MINNEAPOlIS NEW ORLEANS PHOENXPR.ufc-.
NEWYORKPHILADELPHIA RAlEIGH SAN~SCO TORONTO WAStttGTON. D.C.
~~ MuItin8tioll8l Group of Actu8ries and ConsuItanta BARa~ RJSsa.s D CElEVA HAM~ ~ ~ MEL8().RNE
A rrrc--- MEXICO CITY OSLO PARIS
33
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
SUMMARY OF ACTUARIAL ASSUMPTIONS amortization period. This methodology was adopted
AND METHODS 30,
September 1983.
rate
The assumed of invesbnentreturn is statedas 8.0% The scheduleon the following page demonstrates the
compounded annually (net of investment expenses). effect of the actuarial smoothing for fiscal years2005
The total return (on an actuarial basis) after expenses through 2007. as well as to reflect the portion of the
for the fiscal year was 10.88%. actuarial gain/(loss) to be recognized in future years
resultingfrom currentand pastyears' experience.
Effective October I, 2005, dIe total active payroll is
to
assumed increase4.0% for inflation. The merit and
longevity component assumptions were adopted
October I, 1996, reflecting a gradation based on age,
which is higher at younger ages, decreasing to a
minimum amount near retirement. These ranges are
3.0% at age 20 to 0.5 % at age 45. Therefore, the
estimatedtotal rate of salary increasedecreases with
age. For example,at an age of 20 the estimatedtotal
rate of salary increasewould be 7.0% (4.0% + 3.0%)
decreasingso that at an age of 45 it would be 4.5%
(4.0% + 0.5%). Effective October 1,2005, participants
with 10 years of service or less, have an additional
salary i~ assumptionscale which decreases from
5.00% at 0 yearsto 0.50% at 10 years. The actualrate
of average salary increase for employees remaining
active for 2007 was4.53%.
Beginning October 1, 2005, the mortality table usedto
calculate longevity for actives, inactives, and new
retireeson or after October 1, 2004 is the 1994 Group
Annuity Mortality Table. For disabled retirees, the
healthy life mortality ratesare set forward 5 years. The
1983 Group Annuity Table for healthy lives and the
1983 Group Annuity Table set forward 10 years for
disabled lives will continue to be maintained for
individuals retiring prior to October 1, 2004. It was
fIfSt usedfor the actuarialvaluationOctober 1, 1996.
The probabilities of withdrawal from service, together
are
with individual pay increaseassumptions, shown in
the scheduleon page 38. The current withdrawal rates
were first used for the actuarial valuation as of
October I, 1996.
Effective October I, 2005, probabilities of retirement
by eligible membersare assignedbasedupon length of
on
serviceasshownin the schedule page38.
An individual entry-age actuarial cost method of
valuation is used in determining age and service
allowance actuarial liabilities and normal cost.
Actuarial gains and losses reduce or increase the
unfundedliability and are amortizedover the remaining
34
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
DETERMINATION OF ACTUARIAL VALUE
(Unaucited)
Oripnal Period RemainingAmount
Amount to be to IX! Allocated
Ff Allocated (I) Total
olm $ (2(.292.104) s (6,073.026) s s s s
OW3 32.900,5.52 8,225.138
03104 18.783.607 4,695.902
~5 2.5.622.062 6,411.351 (2) 6,40.5.516 6.40.1.516
O~ 21.118.448 .5,279,612 10.5.19,224
()6A)7 37.896.963 9,474,241 28,422.722
TOTAL 13.259,365 S 4.1,387,462
Net oontribaion per year (3) 10,020,892 8,833.39' 6.679.612
Beginnina actuarial val~ 257,460,616 280,740,873 314.180.436
Actuarial Value with Reserve
for Extra Benefits 280.740.873 314,180,436 346.71S,317
Less Rexrve for Extra Benefits 2.864.348 3,758,481 4.599.460
Encingactuarialvallx: .!876,52$-
S 277 L 310,421,955 S 342.IIS.8S7
Not..:
(I) Represents the (tifference bet~ assumedand actual investment income to be smoothed over the present and three !wire periods.
(1/4) each year.
(2) Aq..ed by SS.83S this year only to recoplize a*I appreciation from ~ember 30. 2001 and earlier tha has not beeI1previol8ly
recoSllized in the actuarial vallx: of a.-ts.
(3) ~ts t.sedon assumed inoome.
nettam flows net
The member data was furnished by the City of communication specialists. communication operators.
Orlando's employee benefits administrative staff. etc. do not participate.
the
Although examinedfor generalreasonableness, data
wasnot auditedby the actuary. Average Monthly Salary - One thirty-sixth (1136)of
salaryfor the last three yearsof creditedserviceor one-
in
All schedules the actuarial section were provided by sixtieth of salary for the five best yearsof the last ten
the actuary directly or were included in the annual years of service. whichever is greater. [If credited
valuationasof October I, 2007. service is less than three years.the monthly averageof
total salary paid is utilized to calculate the average
The actuarial valuation computations are made by a monthly salary.] Salary includes basepay. differential
Member of American Academy of Actuaries pay. longevity pay. educationalincentive pay. working
(M.A.A.A.). out of classification pay and career developmentpay.
Salarydoes not include overtime pay. line-up time pay.
educationadvancement pay. firearms qualification pay.
or any other form of compensationnot specifically
SUMMARY OF BENEFITPROVISIONS included.
CONSIDERED FOR ACTUARIAL
VALUATION
NORMAL RETIREMENT
Partkipation - All sworn police officers. including
managers.regularly and continually employed in the
Eligibility Any age with 20 or more yearsof credited
police department. Temporary employees and
service.
administrative employees such as office. staff and
administrative assistants. accounting specialists.
community service officers. crime analysts.emergency
35
~
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
Pension Amount - Seventypercent (70%) of average SERVICE DISABILITY RETIREMENT
monthly salary plus two percent (2%) of average
monthly salary multiplied by credited service in excess Eligibility - Total andpermanentdisability for dutiesof
of 20 yearsto a maximumof 5 yearsand eighty percent rank.
(80%), of average monthly salary, for 25 years of
service. For a member with over 40 yearsof credited Pension Amount - Eighty percent (80%) of average
service,there is an additional two percent(2%) for each
year in excessof 40 years, up to a maximum of one monthly salary.
hundred(100%) of average monthly salary.
NON-SERVICE DISABILITY RETIREMENT
EARLY RETIREMENT
Eligibility - Total and permanent
disability for duty asa
Eligibility - At least47 yearsold with at least 10 years memberof the Police Department.
of credited service, but less than 20 years of credited
service. Pension Amount - If credited service is less than 10
years, three percent (3%) of average monthly salary
Pension Amount - For credited serviceof lessthan 20 multiplied by creditedyearsof service.
years, two percent (2%) of average monthly salary
multiplied by credited service. Pension is payable at If credited serviceis 10 yearsor more but less than 20
age47. years, four percent (4%) of average monthly salary
multiplied by credited years of service, to a maximum
of sixty percent(60%) of averagemonthly salary.
VESTING
If credited service is more than 20 years,an additional
four percent (4%) of averagemonthly salary for each
Eligibility - At any age with 10 years or more of
additional year of service over 20 years. Maximum
creditedservice. pension is eighty percent (80%) of average monthly
salary.
Pension Amount - If credited service is 20 or more
years,seventypercent(70%) of averagemonthly salary
plus two percent (2%) of average monthly salary
POST-RETIREMENT SURVIVOR BENEFITS
of
multiplied by creditedservicein excess 20 years(to a
maximumof 5 years). If creditedserviceis lessthan20
years, two percent (2%) of average monthly salary Service Retirement - The surviving spouse of a
multiplied by credited service with pensionpayable at deceasedservice retired member is paid seventy-five
age47. percent(75%) of the amountof the decedent'spension.
Twenty-five percent (25%) of the surviving spouse's
-
Mandatory Retirement No provision. pensionis directed toward any surviving children under
age 18.
DISABILITY RETIREMENT Service Disability Retirement - The surviving spouse
of a deceased service disability retired memberis paid
Disability Definition - Total and permanentdisability seventy-five percent (75%) of the amount of the
the
means loss of one or more limbs, lossof sight in one decedent'spension. Twenty-five percent (25%) of the
or both eyes, loss of hearing in one or both ears, and surviving spouse's pension is directed toward any
any other condition which rendersthe employeeunfit to surviving children underage 18.
perform the required duties of the employee'srank at
the time of impairment. Non-Service Disability Retirement - The surviving
spouse of a deceased non-service disability retired
memberis paid sixty-five percent(65%) of the amount
of the decedent'spension. Twenty-five percent(25%)
of the surviving spouse'spensionis directedtoward any
surviving children underage 18.
36
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
PRE-RETIREMENT SURVIVOR BENEFITS NON-POLICEMEMBER CONTRIBUTIONS
Service Connected Death - The surviving spouseof a Chapter 185, Florida Statutes - Premium taxes
deceased employeeis paid seventy-fivepercent (75%) collected on certain forms of casualtyinsurancewritten
of an amount of pension computedas if the decedent on property in the City of Orlando are distributedto the
had retired with 25 years of credited service. This Pension Fund pursuant to Florida Statutes (F.S.)
produces a pension of sixty percent (60%) of the Chapter 185. City of Orlando - Amounts determined
deceased employee'saveragemonthly salary. Twenty- actuarially in accordancewith F.S. Chapter 185 and
five percent(25%) of the surviving spouse'spensionis Chapter112.
directedtoward any surviving children underage 18.
Non-Service Connected Death - The surviving spouse COST-OF-LIVING (COLA) INCREASES
of a deceased employeewith at least 10 yearsof credit
serviceis paid sixty-five percent(65%) of an amountof Active memberswho retired after July 1. 1995 with 20
pensioncomputedas if the decedenthad retired under or more years of credited service. receive an annual
the non-service connected disability provision. Twenty- COLA increaseof two percent(2%) per year beginning
five percent(25%) of the surviving spouse'spensionis at age55. The COLA also appliesto surviving spouses
directedtoward any surviving children underage 18. andchildren.
In both the Pre-Retirement and Post Retirement
Survivor Benefits sectionsexplained on this page, the
MISCELLANEOUS
twenty-five percent (25%) pension benefit for the
surviving children is divided equally and upon reaching
Remarriage - The pension of a surviving spouse
for
age 18, the percentage eachchild is then returnedto
terminatesupon the remarriageof the spouseunlessthe
or
the surviving spouse remainingchildren.
memberwaskilled in the line of duty. Suchtermination
doesnot affect any pensionto which surviving children
areentitled.
NON-VESTED TERMINATION
Child's Pension - A child's pension shall terminate
An employee who terminatesemploymentand is not upon death, marriage, cessation of dependency,or
eligible to retire or elect a vested deferred pension is attainmentof age 18.
entitled to a refund of the full amount of employee
contributions. Interest is not paid on refunded
contributions.
DEFERRED RETIREMENT OPTION PLAN
(DROP)
ACTIVE MEMBER CONTRIBUTIONS
A Deferred Retirement Option Plan (DROP) was
implementedon July 1,2003. A participantmay retire
The basic contributions are 1% of pensionable pay for at any time after completing21 yearsof servicewith the
management police officers and two percent (2%) of option to back DROP for up to three yearsbut not to a
pensionablepay for non-management police officers. date earlier than the date on which the member first
Active police officers also contribute 0.40% of becameeligible for a service retirement pension (20
pensionable pay to finance the 1988removal of the age years of service). The retirement benefit amount is
47 requirement for normal retirement, 3.33% of calculated based upon service and salary at the back
pensionablepay for the cost-of-living (COLA), and DROP date.. The DROP accountis credited with eight
effective July 1, 2003, 2.74% of pensionablepay to percent(8%) simple interestcompounded annuallyfrom
financeDROP and other benefit enhancements. the back DROP date. No forward DROP is permitted.
)1
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
WImDRA W AL FROM ACTIVE EMPLOYMENT
BEFORE AGE AND SERVICE RETIREMENT ELIGIBILITY
Percent of Active Members Seoaratiol!
Expected
Separations
Sample Years of Within
Aees Service Next Year
All 0 7.50 %
5.63
2 3.75
3 3.00
4 2.63
20 5 & Over 7.50
25 1.88
30 1.69
35 1.33
40
45
50
55
60
INDIVIDUAL PAY INCREASE ASSUMPTIONS
Individual's Additional
Annual Pay Increase With
Sample Percent Increase Years of Ten Years of
A2es Basedon Al!e (1) Service Serviceor Less
20 7.00 % 0 5.00 %
25 6.50 1 4.75
30 6.00 2 4.50
35 5.50 3 4.00
40 5.00 ~ 3.50
45 4.50 5 3.00
50 4.00 6 2.50
55 4.00 7 2.00
60 4.00 8 1.50
9 1.00
10 0.50
(1) The above Annual Pay Increase Rates include 4.0% inflation.
PROBABILITIF$ OF RATES OF RETIREMENT
PERCENT OF ELIGIBLE ACTIVE MEMBERS RETIRING WITHIN NEXT YEAR
Years of Percent of
Service Active Members
10-14 2 %
1.5-19 0
20-21. 13
22-24 6
25 40
26-29 15
3(}+0 100
REnREMENT AGE FOR INACTIVE VESTED PARTICIPANTS
to
Fonner employeeswith rights to deferredbenefits are assumed retire at earliest eligibility.
38
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
SCHEDULE OF ACI'IVE MEMBERS' VALUATION DATA AND
RETIRANTS AND BENEFICIARIES
(Unaudited)
Schedule of Active Members' Valuation Data
Valuation Annual Annual -I. Increase
Date No. Payroll Avera2e Pay In Aver82e Pay
9/30/2002 681 $ 34,952,565 $ 51,325 6.26 %
9/30/2003 686 37,147.683 54.151 5.51
9/30/2004 689 39.442.561 57.246 5.72
9/30/200S 693 39.966,520 57.672 0.74
9/30/2006 701 41.844.752 59.693 3.50
9/30/2007 738 44.813.194 60.722 1.72
Scheduleof Retirants and Beneficiaries
Added Removed Rolls- ~.
To Rolls From Rolls End orVear Increase Average
Valuation ADDu.1 ADDu" ADDu" in ADDu" ADnu"
Date
9130/2002
---
No.
IS
Allowances
$ 472,700
No.
4 $
Allowances
92,200
No.
381
Allowances
$10,502,700
Allowances
4.07 0/0
Allowances
$ 27,600
9/30/2003 20 853,000 7 194,100 394 11,210,~ 6.74 28,500
9/30/2004 22 820,000 9 135,900 407 11,977,800 6.84 29,400
9/30/2005 25 998,500 3 52,300 429 13,016.800 8.67 30,300
9/30/2006 18 ~,200 1 17,600 446 14,101,200 8.33 31,~
9/30/2007 21 1,015,100 7 133,200 460 15,104,~ 7.12 32,800
39
~
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
SOLVENCY TEST
(Unaudited)
A22re2ate Accrued Liabilities For
(1) (2) (3) Portion of Accrued Liabilities
Active Retirants Active Members Actuarial Covered by
Valuation Member and (Employer Value of Actuarial Value of Asset
Date Contributions Beneficiaries Financed Portion) Assets (a) (1) (1) (3)
9/30/2002 $11,874,700 Sl24,m.300 $118,803.300 $ 242.240,800 100 % 100 % 88.88 %
9/30/2003 13,696,500 132,308.soo 138,538,400 248,847,800 100 100
9/30/2004 16.242.800 140,630,900 144,340,500 255,437.200 100 100
9/30/2005 18,961,400 153,330,100 136,086,200 277,876,500 100 100
9/30/2006 21,413,900 165,812,300 145,770,400 310,422,000 100 100 84.St
9/30/2007 24,083,400 176,756,200 153,827,100 342,11S,.!X)O 100 100
(a) Excludesexcessreservefor statecontributions.
40
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
ANALYSIS OF FINANCIAL EXPERIENCE
(Unaudited)
Gains & LossesIn Accrued Liabilities During Years Ended
Resulting from DifferencesBetweenAssumedExperience& Actual Experience
Gain (Loss) For Year Ended September30, (1)
Type of Activity 2007 2006 2005 2004
Age & Servi~ Re~ts N/A N/A N/A N/A
Disability Retire~nts N/A N/A N/A N/A
Death-in-ServiceBenefits N/A N/A N/A N/A
Withmawal ftom Empl~nt N/A N/A N/A N/A
Pay Increase N/A N/A N/A N/A
Contribution Inoorm N/A N/A N/A N/A
Inve~ ~ S 9,023,170 S 8,903,111 $ (1.068.653) $(14,837,263)
DeathAfter Retire~nt N/A N/A N/A N/A
Other (2) 799,671 (1,869,356) 5.519.780 1,348,857
Gain (or Loss) During Year
From Financial Experience 9,822,841 7,033,755 4.451.127 (13,488,406)
Non-recurringItelm 4.326.285 (3)
Composite Gain (or Loss)
During Year $ 9,822,841 $ 7.03~.7SS $ 4,451,127 $ (9,162,121)
(1) Thosecategories valued by the actuaryunlessthe nequencyappears be
indicated "NtA" are not separately to
trending awayftom the asswmd rate.
(2) This includes gains/lossesftom all somws not separatelydetenJ]jned.
(3) Refin~ts to actuarialliability progranming.
.dol
STATISTICAL SECTION
(Unaudited)
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
STATISTICAL SECTION
(Unaudited)
This part of the City of Orlando's Police PensionFund comprehensive annualfinancial report presentsdetailed
informationas a contextfor understanding note disclosures,
what the information in the financial statements, and
requiredsupplementary information saysaboutthe PensionFund's overall financial health.
CONTENTS
Pa2e(s)
Financial Trends
These schedules contain trend information to help the reader understand how the
and
PensionFund's financial performance well-beinghavechangedover time.
Schedule of Changes in Net Assets 44,45
Schedule Benefit Expenses Type
of by 46
Demographic Information
Theseschedules to the
offer demographic help the readerunderstand environment
within which the PensionFund's financial activitiestake place.
Schedule RetiredMembersby Type of Benefit
of 47
Schedule AverageBenefit Payments
of 48
43
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
SCHEDULE OF CHANGES IN NET ASSETS
LAST TEN FISCAL YEARS
(Unaudited)
Fiscal Year Ended
1998 1999 2000 2001 2002
Additions
Contributions
Emplo~r $ 5,089,355 $ 4.896.922 $ 4,936,884 s 3,374,647 $ 4,357,858
State 2,155,329 1.935.057 2,155,329 2,155,329 2,155,329
State-hiExcessof 1997Fro~
Atmunts - - 148,721 30,615 350,664
Plan Members 1,539.583 1,578,279 1,678,641 1,839,100 1,955,024
Plan MembersBuybacks 7,549 8,716 15,349 13,852 13,101
Total Contributions 8,791,816 8,418,974 8,934,924 7,413,5:43 8,831,976
Investment Income
Net In~ (Loss) ~mvesting
Activities 13,971,082 29,343,667 33,911,107 (19.636.~ (17.627.682)
Net Inco~ from SecuritiesLending
Activities 148,214 125,450
Total Net Investment Income (19,487,882) (17,502,232)
Total Additions to Plan Net Assets (12,074,339) (8,670,256)
Deductions
Benefits 6.949.795 8,429,357 9,465,195 9,887,601 10,285,938
RefundsofContn"butions 76.824 86,559 89,780 99,451 184,810
Administrative Expense 57.499 56,790 61,174 80,414 114,102
Salaries,Wagesand Empl~ Benefits 7.068 16,441 16,588 16,839 19.131
Total Deductions from Plan Net Assets 7.091.186 8,589,147 9,632,737
Change in Net Assets 15.681,201 29,240,510 33,343,301
Net AssetsHeld in Trust For Pension
Benefits:
Beginning of Year
End of Year
44
September30,
S 6,498,015 $ 8,276,320 $ 10.606.538 $ 9,844,035 $ 8,986.310
2,155,329 2.155,329 2.155,329 2,155,329 2,155.329
641,308 894,133 840,979
2,306,238 3,484,572 3,664,741
18,050 33,064 54,133
11,618,940 16,411,133 15,701,492
38,199,006 23,849,585 31,801,746 27,629,697 45,878,198
89,945 316,955 233,458 324,855 258,688
38,288,951 24,166,540 32,035,204 27,954,552 46,136,886
49,007,891 38,752,666 49,156,757 44,365,685 61,838,378
11.2]3,824 12.115.831 13,239.556 14,184,883 16,902.156
34,293 99,310 55,456 86,437 198,541
104,117 164.849 201,859 125,342 143,206
15,955 16.508 16,931 17~12- 17,900
11,388,189 12,396,498 13,513,802 17,261,803
38,519,702 26,356,168 35,642,955 44,576,575
.t~
CITY OF ORLANDO,FLORIDA
POLICEPENSIONFUND
SCHEDULE OF BENEFIT EXPENSES BY TYPE
LAST TEN FISCAL YEARS
(Unaudited)
Disability Benefits
Year Age & Service Benefits Retirants Drop Refunds
Ended Retirants Survivors Duty Non-Duty Survivors Benefits Death Separation Total
1~ S5,434,625 S 170,272 $1,258,308 S 86,590 (1) $ s $ 76,824 $7,026,619
6,620,710 223,442 ,498,615 86.500 (1) 86.559 8,515,916
7,563,347 237,585 1.579.691 84,572 (1) 89,780 9,554,975
2001 7,918,378 226.3.57 1,668,384 74,482 (1) 99,451 9,987,052
2002 8,070,362 138,399 1.865,313 74,482 $137,382 184,810 10,470,748
8,347,034 171.309 2,10S,OOI 74,482 159,162 376,236 34,293 11,268.117
8,976,475 201,724 2,263,.c;x>O 77,984 158.778 436.970 99,310 12.215,141
9,57S,536 246,062 2,501,186 82,767 152,793 681,212 ,616 S3,840 13,295,012
10,246.173 254,400 2,769,605 77,968 152.793 683,944 86.437 14,271,320
11,157,702 282,971 3,03-1,324 99,759 152,793 2.177.607 198,541 17,100,697
(1) This iDfomIation is not available.
46
CITY OF ORLANDO,FLORIDA
POLICEPENSIONFUND
SCHEDULE OF RETIRED MEMBERS BY TYPE OF BENEFIT
SEPTEMBER 30, 2007
(Unaudited)
Number of
Amount of Retirants and Type of Retirement (1) Option Selected (2)
Monthly Benefit Survivors 1 2 3 4 5 6
Deferred
$ 1 - 500 20 2 9 6 2
501 - 1,000 30 2 10 12 6
1,001 - 1,500 49 7 17 7 17
1,501 - 2,000 SS 16 21 3 15
2,001 - 2,500 52 23 6 2 21 -
2,501 - 3,000 53 31 S 14 .t 1
3,001 - 3,500 S3 43 1 S - 4
3,501 - 4,000 56 32 2 IS 7
4,001 - 4,500 38 19 1 8 10
4,501 - 5,000 16 9 . 3 4
S,OOI- S,SOO 16 10 - .
S:,so1 -6,000 7 4 . 3
6,001 - 6,500 10 6 -
6,501 - 7,000 .
Totals (3), 455 204 70 3~ 101 9 38
(1) Type of Benefit
I NomIBl ~Ii~t
2 Early Retirement
3 Survivor payment - normal or early ~Ii~t
4 Duty disability ~tirement
5 Non-duty disability ~Ii~t
6 Drop
(2) All police officers have the right to benefits for eligible survivors as defined in tbeirpeusion plan, with no diminution ofbenefit to the
rebree. This is di~ssed in the Actuarial Section of this Report. Therefore, an ~tion ~e is not necessary.
(3) The benefits ofpaJ1icipants that receive tho~ benefits wxIer legal ~ts wIleR the retiree is alive aIKi receiving benefits
have been a<kIedback to the retirees' ~thly pension aDd are not counted separately here. For the year enmng 9/30/2007.
there were five such paJ1icipantswho are not surviv~
47
CITY OF ORLANDO, FLORIDA
POLICE PENSION FUND
SCHEDULE OF AVERAGE BENEFIT PAYMENTS
LAST TEN FISCAL YEARS
(Unaudited)
Period 10/1/1997- 9/30/1998:
AverageMonthly Benefit $ 2.041 $ 1,706 $ 1,205 $ 1,431 $ 2,008 $ 2,829 S 1,711
Awrage Final Awrage Salary $26.002 $25,660 $53,529 $21,129 $35,437 $42,481 $25,663
NUDiJerof Active Retirants 4 22 29 16 99 105 4
Period 10/1/1998- 9/30/1999:
AverageMonthly Benefit $ 1,105 $ 1,684 $ 1,283 $ 1.430 $ 2,065 $ 3.082 $ 1,726
AverageFinal AverageSalary $33,164 $26,517 $24,939 $23.910 $36,761 $46.041 $25,663
Number of Active Retirants 4 25 30 16 104 132 4
Period 10/1/1999- 9/30/2000
AverageMonthly Benefit $ 1.742 $ 1,738 5 1.231 $ 1,431 $ 2.127 $ 3,123 $ 1,741
AverageFinal AverageSalary $33,764 $26.517 524,134 $23,910 $37.647 $46,499 $25,663
Number of Active Retirants 4 2S 31 16 112 139 4
Period 10/1/2000- 9/30/2001
AverageMonthly Benefit $ 2,053 $ 1,833 $ 1.389 $ 1,666 $ 2,161 $ 3.163 $ 1,279
AverageFinal A wrage Salary $33,313 $27,094 $27,347 $26,989 $38,734 $46.962 $19,187
Number of Active Retirants 5 26 34 IS 115 138 3
Period 10/1/2001- 9/30/2002
AverageMonthly Benefit $ 2,180 $ 1.778 $ 1,488 $ 1,825 $ 2,211 $ 3,18S $ 1,546
AverageFinal AverageSalary $34.504 $27.094 $28,272 $29,092 $39,504 $47,020 $23,192
Number of Active Retirants 7 26 3S 16 118 139 2
Period 10/1/2002- 9/30/2003
AverageMonthly Benefit $ 2.237 $ 1,858 $ 1,451 $ 1,935 $ 2,358 $ 3,235 $ 1,546
AverageFinal A wrage Salary $34,845 $27,944 $28,772 $30,641 $41,374 $47,sSO $23,192
Number of Active Retirants 8 26 38 17 124 140 2
Period 10/1/2003- 9/3()/2004
AverageMonthly Benefit $ 1,839 $ 1,859 $ 1,460 $ 1,935 $ 2,430 $ 3,330 $ 1,546
AverageFinal AverageSalary $34,398 $28,095 $30,785 $30,641 $42,342 $48,536 $23,192
Number of Active Retirants 10 26 42 17 131 145 ?
Period 10/1/2004- 9/30/2005
Awrage Monthly Benefit $ 1.843 $ 2,024 $ 1,420 $2.266 $ 2,550 $ 3,434 $ 1,546
AverageFinal Awrage Salary $35.660 $30.410 $30,774 $34,685 $43,865 $49,506 $23,192
Number of Active Retirants 10 29 44 20 139 147 2
Period 10/1/2005- 9/30/2006
AverageMonthly Benefit $2,392 $ 2.072 $ 1,479 $ 2,358 $ 2,584 $ 3,589 $ 2,430
AverageFiDalAverageSalary $35,660 $31,135 $31,439 $35,966 $44,268 $51,456 $36,236
Number of Active Retirants 10 30 45 21 142 157 3
Period 10/1/2006- 9/30/2007
AverageMonthly Benefit .s 2,073 $ 2,072 $ 1,60S $ 2,667 $ 2,618 5 3,707 $ 4,282
AverageFinal AverageSalary $3s.660 $31,135 $32,926 $39,938 $44,852 552,663 $62,326
Number of Active Retirants 10 30 48 24 146 163
4~
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