City actuary: pension contribution due Dec. 31 will be $21.6 million; funded ratio 69.9%

Todd Green, the pension actuary for CavMac (formerly Kavanaugh Consulting), told the Pompano Beach City Commission on April 22 that the city's general employees retirement system requires a total employer contribution of $21.6 million payable Dec. 31, 2025, and has a funded ratio of 69.9% as of the valuation date Oct. 1, 2024.

The valuation measures the plan's assets against future benefit payments for members who were in the plan on Oct. 1, 2024. "The total employer cost as a percent of pay is 46.66% of pay," Green said during his presentation, describing how the plan's normal cost and unfunded liability components combine to produce the annual city payment.

Why it matters: the city's required contribution affects budget planning for the coming fiscal year and reflects long-term pension funding trends, including changes in investment return assumptions and mortality tables.

Key findings and context

- Required contribution: $21,600,000 payable Dec. 31, 2025. The $1.3 million year-over-year increase is largely attributable to payroll growth and two assumption changes, Green said.

- Funded ratio: improved to 69.9% from 68.7% the prior year on the firm's actuarial value of assets (a smoothed asset measure), while market returns since 2014 averaged just north of 8%.

- Unfunded accrued liability: rose to roughly $123 million from about $119 million the prior year. Green said most of the unfunded liability stems from investment experience (gains and losses) and past market volatility.

- Assumption changes: a state-mandated mortality table update added roughly $688,000 to this year's cost; reducing the assumed long-term return from 7.35% to 7.25% added about $541,000.

- Plan membership and payroll: as of Oct. 1, 2024, the actuarial data showed about 570 active members, 511 retirees, an average active salary near $80,000, and total active payroll of about $45.7 million.

What the actuary told the commission

Green summarized the funding equation, emphasizing that 60%–70% of long-term benefit cost is covered by investment earnings if the plan is prefunded: "By pre-funding or saving in advance, you're reducing the cost of providing these benefits to the general employees by 60 to 70%." He also told commissioners the plan is paying down its unfunded liability and that the amortization schedule shows the liability declining each year under current assumptions.

Commission questions and next steps

Vice Mayor Fournier asked whether the 7.25% assumed rate of return is expected to remain stable; Green said the retirement board sets the rate but indicated the lowered assumption reflects current markets. Commissioners pressed for historical return context; Green said since Feb. 2014 the fund has earned just over 8% on a market basis but cautioned that historical spikes (for example the 1990s) are unlikely to recur.

Green closed by noting the evaluation report is a summary and that the full 10/01/2024 report contains the complete details used to set the contribution.

Ending: The valuation sets the city's budget planning benchmark for pension funding. The commission did not take an immediate vote on changes to policy; the actuarial report will inform final budget deliberations for the next fiscal year.