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HomeMy WebLinkAboutDocumentation_Pension Public Safety_Tab 16A2_08/11/2005No Text VILLAGE OF TEQUESTA, FLORIDA PUBLIC SAFETY OFFICERS' PENSION TRUST FUND TABLE OF CONTENTS PAGE REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1-2 MANAGEMENT DISCUSSION AND ANALYSIS (MD&A) 3-6 (Required Supplementary Information) FINANCIAL STATEMENTS Statement of Plan Net Assets '7 Statement of Changes in Plan Net Assets g Notes to Financial Statements 9-13 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Employer Contributions 14 COMPLIANCE REPORT Report of Independent Certified Public Accountants on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 15-16 1 n REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS t t 1 1 1 t r. Cohen Holtz Accountants Advisors REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Trustees Public Safety Officers' Pension Trust Fund Tequesta, Florida We have audited the statement of plan net assets of the Village of Tequesta's Public Safety Officers' Pension Trust Fund (the Plan) as of September 30, 2004 and the related statement of changes in plan net assets for the year then ended. These financial statements are the responsibility of the Board of Trustees. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the Plan net assets of the Village of Tequesta's Public Safety Officers' Pension Trust Fund as of September 30, 2004, and the changes in Plan net assets for the year then ended in conformity with accounting principles generally accepted in the United States. In accordance with Government Auditing Standards, we have also issued a report dated February 3, 2005 on our consideration of the Plan's internal control over financial reporting and our test of its compliance with certain laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. The report is an integral part of an audit performed in accordance with GovernnzentAuditing Standards and should be read in conjunction with the report in considering the results of the audit. v ~~ Rachlin Cohen & Holtz LLP One Southeast Thirtl Avenue ^ Tenth Floor ^ Miami, Florida 33131 ^ Phone 305.377.4228 ^ Fax 305.377.8331 ^ WWW.raChlin.COm An Independent Member of Baker Tilly International M I A M I ^ F O R T L A U D E R D A L E ^ W E S T P A L M B E A C H ^ S T U A R T Board of Trustees Public Safety Officers' Pension Trust Fund Page Two Management's Discussion and Analysis on pages 2 to 4 is not a required part of the basic financial statements, but is supplementary information required by the accounting principles generally accepted in the United States. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. ~~~ Miami, Florida February 3, 2005 -2- Cohen Holtz Accountants Advisors t t fl 1 1 MANAGEMENT DISCUSSION AND ANALYSIS (MD&A) i 1 t 1 ~II `I VILLAGE OF TEQUESTA, FLORIDA PUBLIC SAFETY OFFICERS' PENSION TRUST FUND MANAGEMENT'S DISCUSSION AND ANALYSIS This narrative discussion and analysis of the Village of Tequesta, Florida Public Safety Officers' Pension Trust Fund (the Plan) financial performance provides an overview of the Plan's financial activities for the fiscal year ended September 30, 2004. It is meant to assist the reader in understanding the Plan's financial statements by providing an overall review of the financial activities during the year and the effects of significant changes, as well as comparison with the prior year's activity and results. This discussion and analysis is intended to be read in conjunction with the Plan's financial statements, which begin on page 5. Overview of Basic Financial Statements The following discussion and analysis are intended to serve as an introduction to the Plan's basic financial statements. The basic financial statements are: • The Statement of Plan Net Assets -presents the financial position of the Plan at fiscal year- end. It indicates the assets available for payment of future benefits and any current liabilities that are owed as of the statement date. Investments are shown at fair value. All assets and liabilities are determined on an accrual basis. • The Statement of Changes in Plan Net Assets -presents the results of activities during the year. All changes affecting the assets and liabilities of the Plan are reflected on an accrual basis when the activity occurred, regardless of the timing of the related cash flows. In that regard, changes in the fair values of investments are included in the year's activity as net appreciation (depreciation) in fair value of investments. • The notes to Financial Statements -provide additional information that is essential to a full understanding of the data provide in the financial statements. The notes present information about the Plan's accounting policies, significant account balances and activities, material risks, obligations, contingencies and subsequent events, if any. Required Supplementary information - as required by the Governmental Accounting Standards Board (GASB) is presented after the Notes to the Financial Statements. The financial statements are prepared in accordance with GASB Pronouncements. t 1 t ', ~ FINANCIAL HIGHLIGHTS The Plan's net assets held in trust at September 30, 2004 for pension benefits increased by $427,552 (21.7%) from the prior year. A key factor in this in crease was net investment income, which increased $75,022 from the prior year. l N A ssets an et Changes in P For the Years Ended September 30 2004 2003 Additions: Employer contributions $ 102,427 $ 92,863 Employee/member contributions 74,195 65,769 State contributions 124,486 112,762 Net investment income 139,490 64,468 Total net additions 440,598 335,862 Deductions: Benefit payments and withdrawals (13,046) (1,537) Total deductions (13,046) (1,537) I Net increase 427,552 334,325 Plan net assets held in trust for pension benefits: Net assets, beginning of year 1,966, ] 47 1,631,823 Net assets, end of year $ 2,393,699 $1,966,148 Firefighters and police officers are required to contribute 5% of their compensation to the plan. The State of Florida contributes the net proceeds of the excise tax imposed upon casualty and property insurance premiums on policies written within the Village. The Village is required to contribute the remaining actuarially determined amount to fund the plan using the aggregate actuarial cost method as approved by the plans' Board of Trustees. The aggregate method does not separately identify or amortize the unfunded actuarial liability. Employer contributions increased in fiscal year 2004 by $9,564, an increase of 9% over the prior year. Plan benefits and withdrawals increased $11,509 (749%) from the prior year. The increase is primarily due to the increase in the number of retirees and beneficiaries receiving benefits. 1 L r 1 t 1 1 1 t i ~] [l r~ i~ 1 STATEMENT OF PLAN NET ASSETS As noted above, the Plan experienced a 22% increase in net assets held in trust for pension benefits. Plan Net Assets For the Years Ended September 30 Investments: Money market funds Corporate stocks Corporate bonds Government backed assets Accounts receivable Due from other funds Total assets LIABILITIES AND NET ASSETS Accounts payable Net assets held in trust for pension benefits 2004 2003 $ 287,916 $ 180,462 1,306,550 1,069,042 266,212 221,655 531,683 490,386 - 3,129 11,358 3,897 2,403,719 1,968,57 l (10,020) (2,423) $ 2,393,699 $ 1,966,148 Investments: The Plan maintains a Master Custodian Agreement, whereby the investment securities are held in the Plan's name by a financial institution acting as the Plan's agent. As of September 30, 2004 no single investment exceeded 5% of Plan assets. FUNDING STATUS Of primary concern to most pension plan participants is the amount of money available to pay benefits. A pension plan becomes under-funded when the employer fails to make annual actuarially required contributions to that plan. The Village has traditionally contributed the annual required contribution to the Village of Tequesta's Public Safety Officers' Pension Trust as determined by the Plans' actuary. An indicator of funding status is the ratio of the actuarial value of assets (AVA) to the actuarial accrued liability (AAL). An increase in this percentage over time usually indicates that a plan is becoming financially stronger. However, a decrease will not necessarily indicate that a plan is in financial decline. Changes in actuarial assumptions can significantly impact the AAL and performance in the stock and bond markets can have a material impact on the AVA. -5- The Plan's schedule of funding progress is provided below: SCHEDULE OF FUNDING PROGRESS Actuarial Unfunded UAAL Accrued Actuarial as a Actuarial Liability Accrued Percentage Value AAL - Liability Funded Covered of Covered Valuation of Assets Entry Age (UAAL) Ratio Payroll Payroll Date ~ ~ (b) _ (a) a( ) / (b) ~ b-a / c 10/1./1998 $ 934,659 $ 532,439 $(402,220) 175.5% $ 967,853 -41.6% 10/1/2000 1,683,867 834,839 (849,028) 201.7% 1,203,923 -70.5% ]0/1/2002 ],875,657 1,428,869 (446,788) 131.3% 2,132,437 -21.0% 10/ 1 /2003 1,847,551 1,618,135 (229,416) 1 14.2% 1,339,667 -l 7. l % Because this Plan uses the aggregate Actuarial Cost Method for Funding, the Schedule of funding Progress is not required per GASB No. 25. The Schedule above is included in this report in case the information would be useful to users of the financial statements. This financial report is designed to provide a general overview of the Village of Tequesta's Public Safety Officers' Pension Trust Fund. Questions concerning any data provided in this report or requests for additional information should be directed to the Village of Tequesta, Finance Office, 250 Tequesta Drive, Suite 304, Tequesta, Florida 33469. -6- t t t fl 1 1 t i~ i L 1 t FINANCIAL STATEMENTS 1 VILLAGE OF TEQUESTA, FLORIDA PUBLIC SAFETY OFFICERS' PENSION TRUST FUND STATEMENT OF PLAN NET ASSETS SEPTEMBER 30, 2004 ASSETS Cash and cash equivalents Investments, at fair value: Common stocks U.S. Government obligations Corporate bonds and debentures Total investments Due from other funds Total assets LIABILITIES AND NET ASSETS Accounts payable Net assets held in trust for pension benefits Police Firefighters' Officers Pension Pension Total $ 228,492 $ 59,424 $ 287,916 1,037,139 269,411 1,306,550 422,050 109,633 531,683 211,319 54,893 266,212 1,899,000 493,361 2,392,361 3,507 7,851 11,358 1,902,507 501,212 2,403,719 $1,894,491 $ 499,208 $2,393,699 See notes to financial statements. -7- VILLAGE OF TEQUESTA, FLORIDA PUBLIC SAFETY OFFICERS' PENSION TRUST FUND STATEMENT OF CHANGES IN PLAN NET ASSETS YEAR ENDED SEPTEMBER 30, 2004 ADDITIONS Contributions: Employer Employee State Total contributions Investment income: Net appreciation in fair value of investments Investment earnings Less investment expenses Net investment income Total additions DEDUCTIONS Benefits paid to participants Total deductions Net increase Net assets held in trust for pension benefits: Beginning Ending Police Firefighters' Officers Pension Pension Total $ 82,036 $ 20,391 $ 102,427 48,205 25,990 74,195 56,536 67,950 124,486 186,777 114,331 301,108 108,776 8,563 117,339 37,040 25,986 63,026 145,816 34,549 180,365 33,145 7,730 40,875 112, 671 26, 819 13 9,490 299,448 141,150 440,598 13,046 - 13,046 13,046 - 13,046 286,402 141,150 427,552 1,608,089 358,058 1,966,147 $1,894,491 $ 499,208 $2,393,699 See notes to financial statements. -8- VILLAGE OF TEQUESTA, FLORIDA PUBLIC SAFETY OFFICERS' PENSION TRUST FUND NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2004 1 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The Village of Tequesta Public Safety Officers' Pension Trust Fund's, (the Plan) financial statements are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. Method Used to Value Investments Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national exchange are valued at the last reported sales price. Investments that do not have an established market are reported at estimated fair value. Net appreciation in fair value of investments includes realized and unrealized gains and losses. Realized gains and losses are determined on the basis of specific cost. Within certain limitations as specified in the Plan, the investment policy is determined by the Board of Trustees and is implemented by the Plan's investment manager. Purchases and sales of securities are recorded on the trade-date. Interest and dividends are recorded as earned on the accrual basis. Authorized Plan Investments The Board recognizes that the obligations of the Plan are long-term and that its investment policy should be made with a view toward performance and return over a number of years. The general investment objective is to obtain a reasonable total rate of return defined as interest and dividend income plus realized and unrealized gains or losses commensurate with the prudent investor rule and Chapter 185, Florida Statutes. Custodial and certain investment services are provided to the Plan under contracts with a registered broker-dealer in the State of Florida. The Plan's investment policies are governed by the Investment Policy Statement adopted by the Board of Trustees and Florida Statutes. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Plan administrator to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from those estimates. -9- VILLAGE OF TE UE TA FLORIDA Q S , PUBLIC SAFETY OFFICERS' PENSION TRUST FUND NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 2. DESCRIPTION OF PLAN The following brief description of the Village of Tequesta Public Safety Officers' Pension Trust Fund is provided for general information purposes only. Participants should refer to the Plan Ordinance for a more complete description of the Plan's provisions. Plan Description The Plan is asingle-employer defined benefit plan covering all full-time firefighters and police officers of the Village of Tequesta, Florida hired after December 31, 1995. The Plan was created by Ordinance No. 585 adopted on December I1, 2003. The Plan is subject to Chapters 185 and l 12 of the Florida Statutes. Amendments to the Plan's provisions must be authorized by the Village Council of the Village of Tequesta. A five member Board of Trustees administers the Plan. Two of the Trustees must be full-time Public Safety Officers who are elected by Plan members. Two of the Trustees are legal residents of the Village appointed by the Village Council. The fifth Trustee is selected by a vote of the other four members. Under the terms of the Ordinance, the plan is required to account for the funds and the securities of the Police Officers and the Firefighters separately. Investment income and expenses are allocated monthly based on the value of each component's investments at the beginning of the month. Membership in the Plan as of September 30, 2004 was as follows: Retirees and beneficiaries currently receiving benefits and terminated members that may be entitled to benefits but not yet receiving them - Current members: Police officers 9 Firefighters 16 Total 25 Contributions Plan members are required to contribute 5% of their salary. Each year the state excise tax payment received from the State of Florida through the Village of Tequesta is allocated to the components in the same manner as the investment income and expenses. The Village of Tequesta is required to make quarterly contributions in an amount equal to fund any actuarially determined deficiency. Village contributions for fiscal year ended September 30, 2004 were 8.96% of covered payroll ($120,097). Participants may not borrow against the Plan. -10- VILLAGE OF TEQUESTA, FLORIDA PUBLIC SAFETY OFFICERS' PENSION TRUST FUND NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 2. DESCRIPTION OF PLAN (Continued) Pension Benefits Plan members are fully vested after six years of credited service. Normal retirement is the earlier of age 55 and 6 years of service or age 52 with 25 years of service. Early retirement is available at age 50 with 6 years of service with the benefit reduced by 3% for each year early. Normal retirement benefit is in the form of an annuity guaranteed for ten years and life thereafter and is paid as follows: 3.0% of average final compensation for the first 6 years 3.5% for each of the next 4 years 4.0% for each of the next 5 years 2.5% for each of the next 6 years, and 2.0% for each year after 21 years. Disability benefits are paid at the greater of 42% of the average monthly compensation or the accrued normal retirement benefit if the disability occurred in the line of duty. The benefit is the greater of 25% of the average monthly compensation or the accrued normal retirement benefit if the disability did not occur in the line of duty. Death benefits are paid in the amount of 50% of average final compensation for incidents occurring in the line of duty. For incidents not occumng in the line of duty, death benefits are paid at the actuarial equivalent of the accrued normal retirement benefit for participants with at least 6 years of credited service. A terminating member with less than 6 years of service will receive a refund of the accumulated contributions. Terminating members who are vested will receive the accrued benefit at the normal retirement date. The actuarial cost method used for determining the contribution requirements of the Plan is the aggregate actuarial cost method. This method does not identify or separately amortize unfunded actuarial accrued liabilities. In accordance with Governmental Accounting Standards Board (GASB) Statement No. 25, a schedule of funding progress is not required, and has not been provided, when the aggregate actuarial cost method is used. VILLAGE OF TEQUESTA, FLORIDA PUBLIC SAFETY OFFICERS' PENSION TRUST FUND NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 3. DEPOSITS AND INVESTMENTS Deposits In addition to insurance provided by the Federal Deposit Insurance Corporation, all deposits, which include cash on hand, are held in qualified public depositories pursuant to State of Florida Statutes Chapter 280, Florida Security for Public Deposits Act. Under the Act, all qualified public depositories are required to pledge eligible collateral. In the event of a failure of a qualified public depository, the remaining public depositories would be responsible for covering any resulting losses. Therefore, all. deposits are deemed as insured or collateralized with securities held by the entity or its agent in the entity's name. Investments Investments are required to be categorized to give an indication of the level of credit risk assumed by the Plan at year end. The three categories of credit risk as defined by GASB Statement No. 3 are as follows: (1) Insured or registered, or securities held by the entity or its agent in the entity's name; (2) Uninsured or unregistered, with securities held by the counterparty's trust department or agent in the entity's name; and (3) Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but not in the entity's name. The Plan maintains a Master Custodian Agreement, whereby the investment securities are held in the Plan's name by a financial institution acting as the Plan's agent. Included in investments are money market mutual funds, which are classified as short-term investments. Therefore, as of December 31, 2004, the investment securities, except for the money market mutual funds, are classified as credit risk category 1 under GASB Statement No. 3. At year end, the Plan's investment balances were as follows: Carrying Value Common stocks $1,306,550 U.S. Government Securities 531,683 Corporate bonds and debentures 266,212 2,104,445 Investments not subject to risk categorization: Money market mutual funds 287,916 Total $ 2,392,361 As of December 31 2004 no single inv b estment exceeded 5% of Plan assets. -12- 1 u VILLAGE OF TEQUESTA, FLORIDA PUBLIC SAFETY OFFICERS' PENSION TRUST FUND NOTES TO FINANCIAL STATEMENTS (Continued) NOTE 3. DEPOSITS AND INVESTMENTS (Continued) Risks and Uncertainties The Plan has investments in a combination of stocks, bonds, and government securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect balances and the amounts reported in the statement of plan net assets and the statement of changes in plan net assets. The Plan, through its investment advisors, monitors the Plan's investments and the risks associated therewith on a regular basis, which the Plan believes minimizes these risks. NOTE 4. ADMINISTRATIVE EXPENSES The Village provides the Plan with services of certain administrative personnel without receiving compensation. Administrative expenses paid by the Village for the year ended 2004 were as follows: Professional services Investment services Other NOTE 5. PLAN TERMINATION $ 29,664 9,203 2~~9 $ 40,876 Although it has not expressed any intention to do so, the Village may terminate the Plan at any time by a written ordinance of the Village Council of Tequesta. In the event that the Plan is terminated or state excise tax contributions to the Plan are permanently discontinued, the benefits of each participant in the Plan at such termination date would be non-forfeitable. The benefit distribution would be distributed to vested officers (including former members entitled to deferred benefits) under the normal or delayed retirement provisions of the Plan. -]3- REQUIRED SUPPLEMENTARY INFORMATION 1 J t r VILLAGE OF TEQUESTA, FLORIDA PUBLIC SAFETY OFFICERS' PENSION TRUST FUND REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTIONS Fiscal Year Annual Ended Required Percentage September 30, Contribution Contributed 1999 $ 89,265 216.3% 2000 89,265 104.6`% 2001 78,035 37.8% 2002 99,223 231.8% 2003 152,976 138.0% 2004 195,964 115.8% The information presented in the required supplementary schedule was determined as part of the actuarial valuation at the dates indicated. The Plan uses the aggregate actuarial cost method which does not identify and separately amortize the unfunded actuarial liability. When a plan uses the aggregate method, the schedule of funding progress is not required and has not been provided. Information as of the October 1, 2003 actuarial valuation which was the valuation used to determine the September 30, 2004 required contribution follows: Valuation date 10/1/2003 Actuarial cost method Aggregate Amortization method N/A Remaining amortization period N/A Asset valuation method Fair value Actuarial assumptions Investiment rate of return* 8% Projected salary increases* 6°/n Cost of living adjustments 0°/~ *Includes inflation at 4% N/A -Not applicable -14- f F~ t u s t i COMPLIANCE REPORT ~ Cohen Holtz Accountants Advisors Report of Independent Certified Public Accountants on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Board of Trustees Village of Tequesta Public Safety Officers' Pension Trust Fund Tequesta, Florida We have audited the statement of plan net assets of the Village of Tequesta Public Safety Officers' Pension Trust Fund (the Plan) as of September 30, 2004 and the related statement of changes in plan net assets for the year then ended, and have issued our report thereon dated February 3, ?005. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Plan's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. Compliance and Other Matters As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the Plan's compliance with certain provisions of laws, regulations and contracts, 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 express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. -15- ~~ } .Y~ Rachlin Cohen & Holtz LLP One Southeast Third Avenue ^ Tenth Floor ^ Miami, Florida 33131 ^ Phone 305.377.4228 ^ Fax 305.377.8331 ^ WWW.rBChII11.C0111 An Independent Member of Baker Tilly International M I A M I ^ F O R T L A U D E R D A L E ^ W E S T P A L M B E A C H ^ S T U A R T Board of Trustees Village of Tequesta Public Safety Officers' Pension Trust Fund Page Two This report is intended solely for the information and use of the Board of Trustees, the Village Council of Tequesta, Plan management and Plan members and is not intended to be and should not be used by anyone other than these specified parties. Miami, Florida February 3, 2005 i~ 1 1 1 1 ~1 ~ _ 16_ Cohen alHoltz Accountants Advisors