Actuarial valuation raises police pension costs; unfunded liability climbs to about $4.1 million

An actuarial presenter summarized the plan valuation to trustees on May 26, reporting that investment gains were favorable but demographic and assumption changes raised the plan's funding needs. "The cost did go up about 2.6% of payroll," the presenter said, and the valuation showed the unfunded actuarial accrued liability rising to about $4.1 million from the prior $3.6 million.

The presenter explained several drivers: salary increases raised projected retirement benefits, lower‑than‑expected turnover meant more members remain on payroll and a state law change required public plans to adopt the Florida Retirement System's updated mortality assumption, which assumes longer lifespans and increases liabilities. He described the smoothing method for investment gains (spreading gains over five years) and said the plan's five‑year smoothed return was 8.46% while the one‑year return would have been 11.34%.

The valuation also set an annual amortization payment to reduce the unfunded liability; the report showed a payment of roughly $521,000 per year. After discussion of methodology and the long‑term return assumption, the board voted to accept the consultants' recommendation to declare an expected return of 7.5% for the next year, several years and the long term.

Trustees asked questions about the composition of normal cost, the effects of hiring six new officers and the assumption timeline; consultants emphasized that the mortality assumption change materially increased liabilities. The board approved the valuation report as presented and adopted the 7.5% expected return declaration.