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Police pension board approves actuarial valuation; funding needs fall as payroll rises
Summary
The City of New Smyrna Beach Police Officers' Retirement Plan board approved its 10/01/2024 actuarial valuation and sent the finalized report to the state. The valuation shows a modest improvement in funded ratio to 76.6% and a slight decrease in required contributions as a share of payroll, largely because of recent hiring.
The City of New Smyrna Beach Police Officers' Retirement Plan board voted to approve its annual actuarial valuation, which reflects plan data as of Oct. 1, 2024, and will be sent to the state.
The board's actuary, Patrick of Foster & Foster, told trustees that funding requirements fell as a percentage of payroll mainly because the department hired additional police officers during fiscal 2024. "I have good news," Patrick said. "The funding requirements went down as a percentage of payroll." He explained the effect is similar to spreading a mortgage payment across a larger payroll base.
Why it matters: the approved valuation determines the city's required contribution for the coming fiscal year and affects the plan's amortization schedule. Patrick said the plan's funded ratio rose from 74.5% to 76.6% and that the annual payment to amortize the unfunded actuarial accrued liability remains roughly $912,000 per year. He also noted individual salary increases averaged about 10.3% for members who had raises, which produced an actuarial loss component that largely offset gains from turnover and investment returns.
On returns and smoothing: Patrick described the plan's four-year smoothing approach for investment gains and losses. While the un-smoothed 2024 market return would have been about 21.9%, smoothing recognized a multi-year gain of about 7.93% for valuation purposes; the board's discount assumption was lowered to 7.65% in prior action. "We basically had $20,000,000 in the plan last year at the beginning of the year," Patrick said when describing the investment picture and expected returns.
Trustees asked several follow-up questions comparing assumptions with statewide benchmarks and the history of the funded ratio; Patrick noted the Florida Retirement System's return assumption is lower (about 6.7%) and reviewed past funded-ratio levels.
After discussion the board approved the valuation by voice vote. Patrick said he will finalize the valuation and submit it to the state as the official report.
