Title
Recommendation to Produce Pension Trust Funds Annual Financial Reports Only in the Comprehensive Annual Financial Report
Body
Recommendation to Produce Pension Trust Funds Annual Financial Reports Only in the Comprehensive Annual Financial Report
BACKGROUND
The question was raised at the Pension Board’s April 27, 2015 meeting regarding retention or elimination of an additional separate annual financial report for the Pension Trust funds and the necessity of the independent auditor producing said report.
DISCUSSION
The issue was originally raised with the Finance Director during the audit review meetings with the staff of Vavrinek, Trine, Day and Company (VTD). Is there a legal requirement for an additional separate annual financial report other than the data and information contained in the Comprehensive Annual Financial Report (CAFR)?
Staff has researched the two enabling ordinances (Ordinance No. 1079 and Ordinance No. 1082) and finds that in each ordinance, Section 4.10 requires the Pension Board to “render annually to the City Council on or before July 31st a report showing the financial condition of the Pension Fund at the close of the preceding fiscal year, detailing receipts and disbursements, the names of persons receiving pension allowances and the amounts paid each such person.” The financial condition and receipts and disbursements are reported quarterly to this body. Quarterly Financial Reports are presented to the City Council. These reports do include the two pension trust funds (receipts and disbursements). Annually, the CAFR and supplemental Basic Financial Statements are presented to the City Council usually in December for the preceding fiscal year. But in no public report are the names of recipients nor amounts paid to each recipient reported.
The Basic Financial Statements contain Supplemental Information (Revenues by Source over 10 years, Expenses by Type over 10 years and Funding Analysis for each plan) which is not included in the CAFR. Since these are both closed plans (e.g. no new members may be added) and each plan is funded through current revenues from the City’s General Fund (“pay as you go” basis), there is no substantive information provided in the Supplemental Information.
The 1079 and 1982 Pension Plans are subject to actuarial valuations every other year just as are the PERS retirement plans. The cost to prepare these reports are charged to each of the two funds but are funded by the General Fund.
FINANCIAL IMPACT
The estimated cost to produce the 1079 and 1082 Basic Financial Statements is $10,000. Staff has not approached VTD for a written confirmation of the amount that the total costs will be reduced as the scoping of this and other reports is yet to be finalized.
RECOMMENDATION
Direct staff to produce the Pension Trust Reports only in the Comprehensive Annual Financial Report.
Respectfully submitted,
Elena Adair
Finance Director
By: Juelle-Ann Boyer
Administrative Specialist
Attachments
1. Ordinance No. 1079
2. Ordinance No. 1082
3. Comprehensive Annual Financial Report, Fiscal Year Ended June 30, 2014 (excerpts)
4. Basic Financial Statements, For the Years ended June 30, 2014 and June 30, 2013, Police and Fire Retirement System Pension Plans 1079 and 1082