Largo actuarial valuation shows pension funded ratio at 78.8%; required employer contribution to rise about $500,000 for FY26

City of Largo staff on Tuesday presented the Police and Firefighters Pension Plan actuarial valuation dated Oct. 1, 2024, reporting a modest improvement in funding ratio and a higher employer contribution requirement for the upcoming fiscal year.

The presenter stated: “As of the date of this report, there were 283 active members and 259 retirees and drop members.” The valuation uses a 6.5% assumed investment return, a 2.5% inflation assumption, and a 20‑year amortization period for unfunded liabilities. The actuarial funding level was reported at 78.8%, up from 77.1% the prior year.

Why it matters: staff said the pension’s required employer contribution for fiscal 2026 is estimated at about $10,040,000, roughly $500,000 higher than the contribution for fiscal 2025. The plan’s unfunded actuarial liability reported in the city’s fiscal statements was stated as about $50,100,000, and the net pension liability to report was given as $31,600,000.

Plan details and context - Membership (valuation date 10/01/2024): 283 active members, 259 retirees/DROP participants. - Assumptions: 6.5% investment return assumption; 2.5% inflation; salary increase assumptions varying by service (roughly 5%–6.5% depending on years of service). - Funding measures: actuarial funded ratio 78.8%; normal cost approx. $4,900,000; reported unfunded actuarial liability ~$50.1 million; net pension liability ~$31.6 million.

Potential plan changes and bargaining Staff noted a union request to align police benefits with fire benefits; earlier analysis (conducted in April) estimated restoring prior police benefit levels would add about $470,000 to first‑year costs and reduce the funded ratio by roughly 0.7 percentage points. Staff told the commission that benefit changes such as cost‑of‑living adjustments (COLAs) are subject to collective bargaining and must be fully funded.

Questions from commissioners Commissioners asked about DROP timing and how members enter the DROP (deferred retirement option), and staff clarified the plan rules as presented in the actuarial report. Commissioners also asked about long‑term plan maturity: staff noted the plan is maturing (more retirees than active members) and that assumptions such as salary growth and investment return are periodically reviewed.

Next steps and availability Staff noted the actuarial report and the plan’s independent financial audit are posted on the city website and that the valuation figures are included in the city’s FY25 financial statements (the city reports one year in arrears for GASB purposes). No formal action was taken during the work session.