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Board approves valuation reports, sets 7% investment assumption for police and fire plans
Summary
Trustees voted to approve Foster & Foster's valuation reports for the city's fire and police pension plans and formally declared a 7% net-of-fees long-term investment return assumption; the actuary said large recent salary increases and assumption changes drove higher contribution requirements.
Trustees approved valuation reports for the city's fire and police pension plans and adopted a 7% net-of-fees long-term investment return assumption after an hour-long presentation from Foster & Foster.
The actuary, Doug (Foster & Foster), said the city's contribution requirement for the fire plan is estimated at 32.33% of payroll for the current fiscal year; with payroll of roughly $2,700,000, he said that implies about $900,000 in employer contributions for the year. He told the board that the plan's contribution requirement rose from about $860,000 last year and that key drivers included a reported 23% increase in pensionable pay for firefighters, weaker recent market returns and a state-mandated change in the mortality assumption.
Doug also explained how premium-tax reimbursements were applied in the reports. "On this page here for contribution requirements, the city gets $153,001.73," he said, and added that some premium-tax receipts are applied as an annual funding credit and the remainder is used to pay down unfunded liability.
On the police plan, Doug reported a current-year city contribution near 28.72% of payroll rising to about 32.54% in 2026'27 and said the plan's unfunded actuarial accrued liability is about $6,100,000, up from $4,300,000 the prior year. He attributed that increase partly to adverse investment experience and partly to assumption changes.
The actuary recommended, and trustees approved, lowering the long-term investment return assumption from the near-term value in the books (7.2%) to 7.0% going forward. "We recommend using 7% for this because that's what you just approved," he said while reading the standard declaration language the state requires boards to make on the record.
Trustees moved and the motion carried by voice vote to accept the valuation reports and the 7% declaration. The board then authorized Foster & Foster to update the standard five-year experience studies and return with specific recommendation in August; Doug said the typical cost would be about $15,000 per study.
The approval will be recorded in the plan files and used to set employer contributions and amortization schedules for the next fiscal cycle. The board also directed staff to note premium-tax credits in the city accounting that offset annual contribution requirements.
The meeting closed with other administrative items on the agenda.
