Treasury Recommendation Primary Unit 251140 Name of Type ...€¦ · BCBS OPEB $0 $14,538,229 0% $1,880,853 24.1% YES Total ... o In section 7 of the corrective action plan template,

Treasury Recommendation Mount Morris Township Pension Corrective Action Plan (CAP)

Primary Unit 251140

Source: Retirement Report 2017, Audited Financial Statements

Staff Recommendation: Approval of the pension corrective action plan submitted by Mount Morris Township, which was received by the Municipal Stability Board (the Board) on 2/15/2019. If approved by the Board, Treasury and the Board will continue to monitor them for compliance per Public Act 202 of 2017 and implementation of their corrective action plan.

Changes Made:

• Modern Plan Design: o Divisions 1,2,10, and 11 have been closed to new hires between 2014 and 2016. o Increased employee contribution rates Div. 1 to 7%, Div. 2 to 8%, Div 10 to 3%, and Div.

11 to 3%.. o Reduced multiplier for Division 1 to 1.5X.

• Plan Funding: o Provided additional lump sum payments to MERS in 2015 and 2018.

• Other Considerations: o None Listed

Prospective Changes:

• Modern Plan Design: o None Listed

• Plan Funding: o Projected additional contribution of $80K-$100K in March 2019.

• Other Considerations: o None Listed

Plan size: members 114

• Inactive employees or beneficiaries currently receiving benefits: 6 • Inactive employees entitled to but not yet receiving benefits: 60 • Active employees: 48

Name of Systems

Type of System

Assets Liabilities Funded Ratio

ADC Revenues ADC/Revenue CAP required?

MERS $18,052,065 $35,075,191 51.5% $1,259,724 $7,795,032

16.2% YES

BCBS OPEB $0 $14,538,229 0% $1,880,853 24.1% YES Total $18,052,065 $49,613,420 $3,140,577 $7,795,032 40.3%


Primary Unit 251140

Corrective Action Plan Criteria:

The following corrective action plan approval criteria are met:

• Underfunded Status: o The corrective action plan demonstrates it will reach the PA 202 established funding

level of 60% funded as demonstrated by the internal analysis/actuarial projection/ actuarial valuation found in the corrective action plan.

• Reasonable Timeframe: o The corrective action plan demonstrates the local unit reaches the PA 202 established

funding level of 60% within a reasonable timeframe (2025).

• Legal and Feasible: o In section 7 of the corrective action plan template, the local unit confirms that the plan

is legal and feasible because the plan follows all applicable laws, the actions listed are feasible, and the plan is approved by the governing body.

The following corrective action plan approval criteria are partially met:

• Affordable: o The local unit confirms in section 5 of the corrective action plan template that the

corrective actions listed will allow for the local unit to make, at a minimum, the annual required contribution payment according to the long-term budget forecast. Howeve

Supplemental Information:

Based on the information provided in the MERS actuarial valuation, the City of Mt. Morris will reach 60% funded by 2025. Additionally, the data found in the provided valuation shows that the computed annual employer contribution increases from $1.5 million to nearly $3 million, an increase of approximately 100% from 2019 to 2039.


Primary Unit 251140

The Community Engagement and Finance Division (CEFD) contact:

• None noted.

Page 1

Michigan Department of Treasury 5598 (08-18)

Protecting Local Government Retirement and Benefits Act Corrective Action Plan: Defined Benefit Pension Retirement Systems Issued under authority of Public Act 202 of 2017.

1. MUNICIPALITY INFORMATION Local Unit Name: ____________________________ ___ Six-Digit Muni Code: __________________________

Defined Benefit Pension System Name: __________________________________________________________

Contact Name (Administrative Officer):__________________________________________________________

Title if not Administrative Officer: ______________________________________________________________

Email:________________________________________ Telephone:_________________________________ 2. GENERAL INFORMATION Corrective Action Plan: An underfunded local unit of government shall develop and submit for approval a corrective action plan for the local unit of government. The local unit of government shall determine the components of the corrective action plan. This Corrective Action Plan shall be submitted by any local unit of government with at least one defined benefit pension retirement system that has been determined to have an underfunded status. Underfunded status for a defined benefit pension system is defined as being less than 60% funded according to the most recent audited financial statements, and, if the local unit of government is a city, village, township, or county, the annually required contribution (ARC) for all of the defined benefit pension retirement systems of the local unit of government is greater than 10% of the local unit of government’s annual governmental fund revenues, based on the most recent fiscal year. Due Date: The local unit of government has 180 days from the date of notification to submit a corrective action plan to the Municipal Stability Board (the Board). The Board may extend the 180-day deadline by up to an additional 45 days if the local unit of government submits a reasonable draft of a corrective action plan and requests an extension. Filing: Per Sec. 10(1) of PA 202 of 2017 (the Act), this Corrective Action Plan must be approved by the local government’s administrative officer and its governing body. You must provide proof of your governing body approving this Corrective Action Plan and attach the documentation as a separate PDF document. Per Sec. 10(4) of the Act, failure to provide documentation that demonstrates approval from your governing body will result in a determination of noncompliance by the Board. The submitted plan must demonstrate through distinct supporting documentation how and when the local unit will reach the 60% funded ratio. Or, if the local unit is a city, village, township, or county, the submitted plan may demonstrate how and when the ARC for all of the defined benefit pension systems will be less than 10% of annual governmental fund revenues, as defined by the Act. Supporting documentation for the funding ratio and/or ARC must include an actuarial projection, an actuarial valuation, or an internally developed analysis. The local unit must project governmental fund revenues using a reasonable forecast based on historical trends and projected rates of inflation. The completed plan must be submitted via email to Treasury at [email protected] for review by the Board. If you have multiple underfunded retirement systems, you are required to complete separate plans and send a separate email for each underfunded system. Please attach each plan as a separate PDF document in addition to all applicable supporting documentation. The subject line of the email(s) should be in the following format: Corrective Action Plan-2017, Local Unit Name, Retirement System Name (e.g. Corrective Action Plan-2017, City of Lansing, Employees’ Retirement System

mailto:[email protected]

Page 2

Pension Plan). Treasury will send an automatic reply acknowledging receipt of the email. Your individual email settings must allow for receipt of Treasury’s automatic reply. This will be the only notification confirming receipt of the application(s). Municipal Stability Board: The Municipal Stability Board (the Board) shall review and vote on the approval of a corrective action plan submitted by a local unit of government. If a corrective action plan is approved, the Board will monitor the corrective action plan for the following two years, and the Board will report on the local unit of government’s compliance with the Act not less than every two years. Review Process: Following receipt of the email by Treasury, the Board will accept the corrective action plan submission at the next scheduled meeting of the Board. The Board shall then approve or reject the corrective action plan within 45 days from the date of the meeting. Considerations for Approval: A successful corrective action plan will demonstrate the actions for correcting underfunded status as set forth in Sec. 10(7) of the Act (listed below), as well as any additional solutions to address the underfunded status. Please also include steps already taken to address your underfunded status as well as the date prospective actions will be taken. A local unit of government may also include in its corrective action plan, a review of the local unit of government's budget and finances to determine any alternative methods available to address its underfunded status. A corrective action plan under this section may include the development and implementation of corrective options for the local unit of government to address its underfunded status. The corrective options as described in Sec. 10(7) may include, but are not limited to, any of the following:

(i) Closing the current defined benefit plan.

(ii) Implementing a multiplier limit.

(iii) Reducing or eliminating new accrued benefits.

(iv) Implementing final average compensation standards.

Implementation: The local unit of government has up to 180 days after the approval of a corrective action plan to begin to implement the corrective action plan to address its underfunded status. The Board shall monitor each underfunded local unit of government's compliance with this act and any corrective action plan. The Board shall adopt a schedule, not less than every 2 years, to certify that the underfunded local unit of government is in substantial compliance with the Act. If the Board determines that an underfunded local unit of government is not in substantial compliance under this subsection, the Board shall within 15 days provide notification and report to the local unit of government detailing the reasons for the determination of noncompliance with the corrective action plan. The local unit of government has 60 days from the date of the notification to address the determination of noncompliance.

3. DESCRIPTIONS OF PRIOR ACTIONS Prior actions are separated into three categories below: System Design Changes, Additional Funding, and Other Considerations. Please provide a brief description of the prior actions implemented by the local government to address the retirement system’s underfunded status within the appropriate category section. Within each category are sample statements that you may choose to use to indicate the changes to your system that will positively affect your funded status. For retirement systems that have multiple divisions, departments, or plans within the same retirement system, please indicate how these changes impact the retirement system as a whole.

Please Note: If applicable, prior actions listed within your waiver application(s) may also be included in your corrective action plan.

Page 3

Please indicate where in the attached supporting documentation these changes are described and the impact of those changes (i.e. what has the local unit of government done to improve its underfunded status, and where can we find the proof of these changes in the supporting documentation?). Note: Please provide the name of the system impacted, the date you made the change, the relevant page number(s) within the supporting documentation, and the resulting change to the system’s funded ratio. Category of Prior Actions: System Design Changes - System design changes may include the following: Lower tier of benefits for new

hires, final average compensation limitations, freeze future benefit accruals for active employees in the defined benefit system, defined contribution system for new hires, hybrid system for new hires, bridged multiplier for active employees, etc.

Sample Statement: The system’s multiplier for current employees was lowered from 2.5X to 2X for the General Employees’ Retirement System on January 1, 2017. On page 8 of the attached actuarial supplemental valuation, it shows our funded ratio will be 60% by fiscal year 2020. Additional Funding – Additional funding may include the following: Voluntary contributions above the actuarially

determined contribution, bonding, millage increases, restricted funds, etc. Sample Statement: The local unit provided a lump sum payment of $1 million to the General Employees’ Retirement System on January 1, 2017. This lump sum payment was in addition to the actuarially determined contribution (ADC) of the system. The additional contribution will increase the retirement system’s funded ratio to 61% by 2025. Please see page 10 of the attached enacted budget, which highlights this contribution of $1 million. Other Considerations – Other considerations may include the following: outdated Form 5572 information,

actuarial assumption changes, amortization policy changes, etc. Sample Statement: The information provided on the Form 5572 from the audit used actuarial data from 2015. Attached is an updated actuarial valuation for 2017 that shows our funded ratio has improved to 62% as indicated on page 13. 4. DESCRIPTION OF PROSPECTIVE ACTIONS The corrective action plan allows you to submit a plan of prospective actions which are separated into three categories below: System Design Changes, Additional Funding, and Other Considerations. Please provide a brief description of the additional actions the local government is planning to implement to address the retirement system’s underfunded status within the appropriate category section. Within each category are sample statements that you may choose to use to indicate the changes to your system that will positively affect your funded status. For retirement systems that have multiple divisions, departments, or plans within the same retirement system, please indicate how these changes impact the retirement system as a whole.

Page 4

Please indicate where in the attached supporting documentation these changes are described and the impact of those changes (i.e. what will the local unit of government do to improve its underfunded status, and where can we find the proof of these changes in the supporting documentation?). Category of Prospective Actions: System Design Changes - System design changes may include the following: Lower tier of benefits for new

hires, final average compensation limitations, freeze future benefit accruals for active employees in the defined benefit system, defined contribution system for new hires, hybrid system for new hires, bridged multiplier for active employees, etc.

Sample Statement: Beginning with summer 2018 contract negotiations, the local unit will seek to lower the system’s multiplier for current employees from 2.5X to 2X for the General Employees’ Retirement System. On page 8 of the attached actuarial supplemental valuation, it shows our funded ratio would be 60% funded by fiscal year 2020 if these changes were adopted and implemented by fiscal year 2019. Additional Funding – Additional funding may include the following: voluntary contributions above the actuarially

determined contribution, bonding, millage increases, restricted funds, etc. Sample Statement: Beginning in fiscal year 2019, the local unit will provide a lump sum payment of $1 million to the General Employees’ Retirement System. This lump sum payment will be in addition to the actuarially determined contribution (ADC) of the system. The additional contribution will increase the retirement system’s funded ratio to 61% by 2025. Please see page 10 of the attached enacted budget, which highlights this contribution of $1 million. Please see page 12 of the attached supplemental actuarial valuation showing the projected change to the system’s funded ratio with this additional contribution. Other Considerations – Other considerations may include the following: outdated Form 5572 information,

actuarial assumption changes, amortization policy changes, etc. Sample Statement: Beginning in fiscal year 2019, the local unit will begin amortizing the unfunded portion of the pension liability using a level-dollar amortization method over a closed period of 10 years. This will allow the retirement system to reach a funded status of 62% by 2022 as shown in the attached actuarial analysis on page 13.

Page 5

5. CONFIRMATION OF FUNDING Please check the applicable answer: Do the corrective actions listed in this plan allow for (insert local unit name) _____________________________ to make, at a minimum, the annual required contribution payment for the defined benefit pension system according to your long-term budget forecast? Yes No

If No, Explain

6. DOCUMENTATION ATTACHED TO THIS CORRECTIVE ACTION PLAN Documentation should be attached as a .pdf to this Corrective Action Plan. The documentation should detail the corrective action plan that would be implemented to adequately address the local unit of government’s underfunded status. Please check all documents that are included as part of this plan and attach in successive order as provided below: Naming convention: when attaching documents please use the naming convention shown below. If there is more than one document in a specific category that needs to be submitted, include a, b, or c for each document. For example, if you are submitting two supplemental valuations, you would name the first document “Attachment 2a” and the second document “Attachment 2b”. Naming Convention

Type of Document

Attachment – 1 This Corrective Action Plan Form (Required)

Attachment – 1a Documentation from the governing body approving this Corrective Action Plan (Required)

Attachment – 2a An actuarial projection, an actuarial valuation, or an internally developed analysis, which illustrates how and when the local unit will reach the 60% funded ratio. Or, if the local unit is a city, village, township, or county, ARC will be less than 10% of governmental fund revenues, as defined by the Act. (Required)

Attachment – 3a Documentation of additional payments in past years that is not reflected in your audited financial statements (e.g. enacted budget, system provided information).

Attachment – 4a Documentation of commitment to additional payments in future years (e.g. resolution, ordinance)

Attachment – 5a A separate corrective action plan that the local unit has approved to address its underfunded status, which includes documentation of prior actions, prospective actions, and the positive impact on the system’s funded ratio

Attachment –6a Other documentation not categorized above

Page 6

7. CORRECTIVE ACTION PLAN CRITERIA Please confirm that each of the four corrective action plan criteria listed below have been satisfied when submitting this document. Specific detail on corrective action plan criteria can be found in the Corrective Action Plan Development: Best Practices and Strategies document. Corrective Action Plan Criteria

Description

Underfunded Status Is there a description and adequate supporting documentation of how and when the retirement system will reach the 60% funded ratio? Or, if your local unit is a city, village, township, or county, how and when the ARC of all pension systems will be less than 10 percent of governmental fund revenues?

Reasonable Timeframe

Do the corrective actions address the underfunded status in a reasonable timeframe (see CAP criteria issued by the Board)?

Legal and Feasible Does the corrective action plan follow all applicable laws? Are all required administrative certifications and governing body approvals included? Are the actions listed feasible?

Affordability Do the corrective action(s) listed allow the local unit to make the annual required contribution payment for the pension system now and into the future without additional changes to this corrective action plan?

8. LOCAL UNIT OF GOVERNMENT’S ADMINISTRATIVE OFFICER APPROVAL OF CORRECTIVE ACTION PLAN

I ____________________________, as the government’s administrative officer (enter title) _____________________________ (Ex: City/Township Manager, Executive director, and Chief Executive Officer, etc.) approve this Corrective Action Plan and will implement the prospective actions contained in this Corrective Action Plan. I confirm to the best of my knowledge that because of the changes listed above, one of the following statements will occur: The _________________________________(Insert Retirement Pension System Name) will achieve a

funded status of at least 60% by Fiscal Year ________ as demonstrated by required supporting documentation listed in section 6.

OR, if the local unit is a city, village, township, or county: The ARC for all of the defined benefit pension retirement systems of ________________________ (Insert local

unit name) will be less than 10% of the local unit of government’s annual governmental fund revenues by Fiscal Year _________ as demonstrated by required supporting documentation listed in section 6.

Signature _____________________________________ Date ______________________________

https://www.michigan.gov/documents/treasury/DRAFT_MSB_Best_Practices_and_Strategies_7.13.18_627989_7.pdf



MUNICIPAL EMPLOYEES' RETIREMENT SYSTEM OF MICHIGANANNUAL ACTUARIAL VALUATION REPORT DECEMBER 31, 2017MT. MORRIS CHTR TWP (2503)

CBIZ Retirement Plan Services / 17199 Laurel Park North, Suite 405, Livonia, MI 48152 / retirement.cbiz.comrpc_id: 15079 Page 2 of 46

Spring, 2018

Mt. Morris Chtr Twp

In care of:Municipal Employees' Retirement System of Michigan1134 Municipal WayLansing, Michigan 48917

This report presents the results of the Annual Actuarial Valuation, prepared as of December 31, 2017.The report includes the determination of liabilities and contribution rates resulting from the participationof Mt. Morris Chtr Twp (2503) in the Municipal Employees’ Retirement System of Michigan (“MERS”).MERS is an independent, professional retirement services company that was created to administerretirement plans for Michigan municipalities on a not-for-profit basis. This report contains the minimumactuarially determined contribution requirement, in alignment with the MERS Plan Documents, fundingpolicy and Michigan Constitution. Mt. Morris Chtr Twp is responsible for the employer contributionsneeded to provide MERS benefits for its employees and former employees under the MichiganConstitution and the MERS Plan Document.

The purpose of the December 31, 2017 annual actuarial valuation is to:• Measure funding progress• Establish contribution requirements for the fiscal year beginning April 1, 2019• Provide actuarial information in connection with applicable Governmental Accounting Standards

Board (GASB) statements

This valuation report should not be relied upon for any other purpose. Reliance on informationcontained in this report by anyone for anything other than the intended purpose could be misleading.

The valuation uses financial data, plan provision data, and participant data as of December 31, 2017furnished by MERS. In accordance with Actuarial Standards of Practice No. 23, the data was checkedfor internal and year to year consistency as well as general reasonableness, but was not otherwiseaudited. CBIZ Retirement Plan Services does not assume responsibility for the accuracy orcompleteness of the data used in this valuation.

The actuarial assumptions and methods are adopted by the MERS Retirement Board, and arereviewed every five years in an Experience Study. The most recent study was completed in 2015.Please refer to the division-specific assumptions described in table(s) in this report, and to theAppendix on the MERS website at:www.mersofmich.com/Portals/0/Assets/Resources/AAV-Appendix/MERS-2017AnnualActuarialValuation-Appendix.pdf.

http://www.mersofmich.com/Portals/0/Assets/Resources/AAV-Appendix/MERS-2017AnnualActuarialValuation-Appendix.pdf

http://retirement.cbiz.com


The actuarial assumptions used for this valuation produce results that we believe are reasonable.

To the best of our knowledge, this report is complete and accurate, was prepared in conformity withgenerally recognized actuarial principles and practices, with the Actuarial Standards of Practice issuedby the Actuarial Standards Board, and is in compliance with Act No. 220 of the Public Acts of 1996, asamended, and the MERS Plan Document as revised. All of the undersigned are members of theAmerican Academy of Actuaries (MAAA), and meet the Qualification Standards of the AmericanAcademy of Actuaries to render the actuarial opinion contained herein. The Retirement Board of theMunicipal Employees' Retirement System of Michigan confirms that the System provides for paymentof the required employer contribution as described in Section 20m of Act No. 314 of 1965 (MCL38.1140m).

This information is purely actuarial in nature. It is not intended to serve as a substitute for legal,accounting or investment advice.

This report was prepared at the request of the Retirement Board and may be provided only inits entirety by the municipality to other interested parties (MERS customarily provides the fullreport on request to associated third parties such as the auditor for the municipality). CBIZRetirement Plan Services is not responsible for the consequences of any unauthorized use.

You should notify MERS if you disagree with anything contained in the report or are aware of anyinformation that would affect the results of the report that have not been communicated to us. If youhave reason to believe that the plan provisions are incorrectly described, that important plan provisionsrelevant to this valuation are not described, that conditions have changed since the calculations weremade, that the information provided in this report is inaccurate or is in anyway incomplete, or if youneed further information in order to make an informed decision on the subject matter in this report,please contact your Regional Manager at 1.800.767.MERS (6377).

Sincerely,

Cathy Nagy, MAAA, FSAJim Koss, MAAA, ASACurtis Powell, MAAA, EA


MT. MORRIS CHTR TWP (2503) - 2017


TABLE OF CONTENTS

Page

Executive Summary 5

Employer Contribution Details 16Table 1

Benefit Provisions 18Table 2

Participant Summary 20Table 3

Reported Assets (Market Value) 21Table 4

Flow of Valuation Assets 22Table 5

Actuarial Accrued Liabilities and Valuation Assets 23Table 6

Actuarial Accrued Liabilities - Comparative Schedule 25Table 7

Division-Based Comparative Schedules 26Tables 8 and 9

Division-Based Layered Amortization Schedule 33Table 10

GASB 68 Information 40

Benefit Provision History 42

Plan Provisions, Actuarial Assumptions, and Actuarial Funding Method 46




Executive Summary

Funded Ratio and Required Employer Contributions

The MERS Defined Benefit Plan is an agent multiple-employer plan, meaning that assets are pooledfor investment purposes but separate accounts are maintained for each individual employer. Eachmunicipality is responsible for their own plan liabilities; MERS does not borrow from one municipality’saccount to pay for another.

The funded ratio of a plan is the percentage of the dollar value of the accrued benefits that is coveredby the actuarial value of assets.

Your Funded Ratio:

12/31/2017 * 12/31/2016

Funded Ratio 54% 55%

* Reflects assets from Surplus divisions, if any.

Michigan Law requires that pension plans be pre-funded, meaning money is set aside now to pay forfuture benefits. Pension plans are usually funded by employer and employee contributions, andinvestment income.

How quickly a plan attains the 100% funding goal depends on many factors such as:

• The current funded ratio• The future experience of the plan• The amortization period

It is more important to look at the trend in the funded ratio over a period of time than at a particularpoint in time.




Your Required Employer Contributions:

Your computed employer contributions are shown in the following table. Employee contributions, if any,are in addition to the computed employer contributions. Changes to the assumptions and methodsbased on the 2015 Experience Study were first reflected in the December 31, 2015 valuations. Theimpact of these changes is being phased-in over a 5 year period. The phase-in allows the employer tospread the impact of the new assumptions over 5 fiscal years. This valuation reflects the third year ofthe phase-in.

Your minimum required contribution is the amount in the “Phase-in” columns. By default, MERS willinvoice you the phased-in contribution amount, but strongly encourages you to contribute more thanthe minimum required contribution. If for 2018 your municipality is making employer contributionsbased on rates without the phase-in applied, contact MERS to ensure the No Phase-in rate is usedagain for 2019 and not the defaulted phase-in rates.

Percentage of Payroll Monthly $ Based on Projected Payroll

Phase-in

NoPhase-in

Phase-in

NoPhase-in

Phase-in

NoPhase-in

Phase-in

NoPhase-in

Valuation Date: 12/31/2017 12/31/2017 12/31/2016 12/31/2016 12/31/2017 12/31/2017 12/31/2016 12/31/2016

Fiscal Year Beginning:April 1,

2019April 1,

2019April 1,

2018April 1,

2018April 1,

2019April 1,

2019April 1,

2018April 1,

2018

Division

01 - Gnrl - - - - $ 9,697 $ 10,275 $ 8,798 $ 9,66502 - PoliceUnion - - - - 92,895 97,115 86,544 92,87410 - GELC - - - - 4,423 4,953 4,538 5,33311 - Sprvsr Prsnl - - - - 9,326 9,794 8,356 9,05812 - Gen.New Hires after 4/ 5.92% 5.92% 5.56% 5.56% 933 933 414 41413 - New Hires Div 01 3.79% 3.79% 3.76% 3.76% 292 292 285 28522 - Police New Hires aft 4 4.61% 4.61% 4.46% 4.46% 2,742 2,742 1,473 1,473

Municipality Total $ 120,308 $ 126,104 $ 110,408 $ 119,102

Employee contribution rates reflected in the valuations are shown below:

Valuation Date:

Employee Contribution Rate

12/31/2017 12/31/2016

Division

01 - Gnrl 7.00% 7.00%02 - PoliceUnion 8.00% 7.00%10 - GELC 2.50% 2.00%11 - Sprvsr Prsnl 3.00% 2.00%12 - Gen.New Hires after 4/ 2.00% 2.00%13 - New Hires Div 01 7.00% 7.00%22 - Police New Hires aft 4 3.50% 3.50%




The employer may contribute more than the minimum required contributions, as these additionalcontributions will earn investment income and may result in lower future contribution requirements.Employers making contributions in excess of the minimum requirements may elect to apply the excesscontribution immediately to a particular division, or segregate the excess into one or more of whatMERS calls ”Surplus” divisions. An election in the first case would immediately reduce any unfundedaccrued liability and lower the amortization payments throughout the remaining amortization period. Anelection to set up Surplus divisions would not immediately lower future contributions, however theassets from the Surplus divisions could be transferred to an unfunded division in the future to reducethe unfunded liability in future years, or to be used to pay all or a portion of the minimum requiredcontribution in a future year. For purposes of this report, the assets in any Surplus division have beenincluded in the municipality’s total assets, unfunded accrued liability and funded status, however, theseassets are not used in calculating the minimum required contribution.

MERS strongly encourages employers to contribute more than the minimum contributionshown above.

Assuming that experience of the plan meets actuarial assumptions:

• To accelerate to a 100% funding ratio in 10 years, estimated monthly employer contributions forthe fiscal year beginning in 2019 for the entire employer would be $202,642, instead of$126,104.

If you are interested in making additional contributions, please contact MERS and they can assist youwith evaluating your options.

How and Why Do These Numbers Change?

In a defined benefit plan, contributions vary from one annual actuarial valuation to the next as a resultof the following:

• Changes in benefit provisions (see Table 2)• Changes in actuarial assumptions and methods (see the Appendix)• Experience of the plan (investment experience and demographic experience); this is the

difference between actual experience of the plan and the actuarial assumptions. For example: o Lower actual investment returns would result in higher required employer contributions, and

vice-versa. o Smaller than assumed pay increases would lower required employer contributions. o Reductions in the number of active employees would lower required contribution dollars,

but would usually increase the contribution rate expressed as a percentage of (the nowlower) payroll.

o Retirements at earlier ages than assumed would usually increase required employercontributions.

o More non-vested terminations of employment than assumed would decrease requiredcontributions.





o More disabilities or survivor (death) benefits than assumed would increase requiredcontributions.

o Longer lifetimes after retirement than assumed would increase required employercontributions.

Actuarial valuations do not affect the ultimate cost of the plan; the benefit payments (current andfuture) determine the cost of the plan. Actuarial valuations only affect the timing of the contributionsinto the plan. Because assumptions are for the long term, plan experience will not match the actuarialassumptions in any given year (except by coincidence). Each annual actuarial valuation will adjust therequired employer contributions up or down based on the prior year’s actual experience.

Comments on Investment Return Assumption and Asset Smoothing

A defined benefit plan is funded by employer contributions, participant contributions, and investmentearnings. Investment earnings have historically provided more than half of the funding. The larger theshare of benefits being provided from investment returns, the smaller the required contributions, andvice versa. Determining the contributions required to prefund the promised retirement benefits requiresan assumption of what investment earnings are expected to add to the fund over a long period of time.This is called the Investment Return Assumption.

The MERS Investment Return Assumption is 7.75% per year. This, along with all of our other actuarialassumptions, is reviewed every five years in an Experience Study that compares the assumptionsused against actual experience and recommends adjustments if necessary. If your municipality wouldlike to explore contributions at lower investment return assumptions, please review the budgetprojection scenarios later in this report.

To avoid dramatic spikes and dips in annual contribution requirements due to short term fluctuations inasset markets, MERS applies a technique called asset smoothing. This spreads out each year’sinvestment gains or losses over the prior year and the following four years. This smoothing method isused to determine your actuarial value of assets (valuation assets), which is then used to determineboth your funded ratio and your required contributions. The (smoothed) actuarial rate of return for2017 was 6.08%, while the actual market rate of return was 13.07%. To see historical details of themarket rate of return, compared to the smoothed actuarial rate of return, refer to this report’s Appendix,or visit our Defined Benefit resource page on the MERS website.

As of December 31, 2017 the actuarial value of assets is 101% of market value due to assetsmoothing. This means that meeting the actuarial assumption in the next few years will requireaverage annual market returns that exceed the 7.75% investment return assumption, or contributionrequirements will continue to increase.

If the December 31, 2017 valuation results were based on market value instead of the actuarial value:

• The funded percent of your entire municipality would be 53% (instead of 54%); and

http://www.mersofmich.com/Employer/Programs/Defined-Benefit-Plan





• Your total employer contribution requirement for the fiscal year starting April 1, 2019 would be$1,530,924 (instead of $1,513,248).




Risk Characteristics of Defined Benefit Plans

It is important to understand that Defined Benefit retirement plans, the plan sponsor, and the planparticipants are exposed to certain risks. While risks cannot be eliminated entirely, they can bemanaged through various strategies. Below are a few examples of risk (this is not an all-inclusive list):

• Economic - investment return, wage inflation, etc.• Demographic - longevity, disability, retirement, etc.• Plan Sponsor and Employees - contribution volatility, attract/retain employees, etc.

The MERS Retirement Board adopts certain assumptions and methods to manage the economic anddemographic risks, and the contribution volatility risks. For example, the investment risk is the largesteconomic risk and is managed by having a balanced portfolio and a clearly defined investmentstrategy. Demographic risks are managed by preparing special studies called experience studies on aregular basis to determine if the assumptions used are reasonable compared to the experience. AnExperience Study is completed every five years to review the assumptions and methods. The nextExperience Study will be completed in 2020.

Risk can also be managed through a plan design that provides benefits that are sustainable in the longrun.

The Actuarial Standards Board has issued Actuarial Standards of Practice (ASOP) No. 51. Thisstandard will be effective for any actuarial work with a measurement date on or after November 1,2018. This means, the December 31, 2018 and later annual actuarial valuation reports for MERS willhave to comply with this standard. This standard will require the actuary to identify risks that, in theactuary’s professional judgment may significantly impact the plan’s future financial condition. Theactuary will have to assess the potential effects of the identified risks on the plan’s future financialcondition. The assessment may or may not be based on numerical calculations. However, theassessment should reflect the specifics of the plan (i.e. funded status, plan demographics, fundingpolicy, etc.). If the actuary concludes that numerical calculations are necessary to assess the risk, theactuary can use various methods to quantify the risk such as scenario tests, sensitivity tests, stresstests, etc.

Some of these risk assessment measures have already been incorporated in the MERS annualvaluation reports. For example, the projections of funded percentage and employer contributionsshown on the following pages could be used to gauge the risk associated with long term investmentrates of return different than the assumed 7.75% annual rate. A history of the municipality’s fundedpercentage as shown in Table 7, could indicate the trend in funded status over time.

Alternate Scenarios to Estimate the Potential Volatility of Results ("What If Scenarios")

The calculations in this report are based on assumptions about long-term economic and demographicbehavior. These assumptions will never materialize in a given year, except by coincidence. Therefore




the results will vary from one year to the next. The volatility of the results depends upon thecharacteristics of the plan. For example:

• Open divisions that have substantial assets compared to their active employee payroll will havemore volatile employer contribution rates due to investment return fluctuations.

• Open divisions that have substantial accrued liability compared to their active employee payrollwill have more volatile employer contribution rates due to demographic experience fluctuations.

• Small divisions will have more volatile contribution patterns than larger divisions becausestatistical fluctuations are relatively larger among small populations.

• Shorter amortization periods result in more volatile contribution patterns.

The analysis in this section is intended to review the potential volatility of the actuarial valuation results.It is important to note that calculations in this report are mathematical estimates based uponassumptions regarding future events, which may or may not materialize. Actuarial calculations can anddo vary from one valuation to the next, sometimes significantly depending on the group’s size.

Many assumptions are important in determining the required employer contributions. In the tablebelow, we show the impact of varying the Investment Return Assumption. Lower investment returnswould result in higher required employer contributions, and vice-versa.

The relative impact of each investment return scenario below will vary from year to year, as theparticipant demographics change. The impact of each scenario should be analyzed for a given year,not from year to year. The results in the table are based on the December 31, 2017 valuation, and arefor the municipality in total, not by division. These results do not reflect a 5-year phase in of the impactof the new actuarial assumptions.

Assumed Future Annual Smoothed Investment Return Assumption

Lower Future Annual ReturnsValuation

Assumption Higher Returns

12/31/2017 Valuation Results 5.75% 6.75% 7.75% 8.75%

Accrued Liability $ 48,280,220 $ 42,549,269 $ 37,841,216 $ 33,931,440

Valuation Assets1 $ 20,434,057 $ 20,434,057 $ 20,434,057 $ 20,434,057

Unfunded Accrued Liability $ 27,846,163 $ 22,115,212 $ 17,407,159 $ 13,497,383Funded Ratio 42% 48% 54% 60%

Monthly Normal Cost $ 45,941 $ 32,571 $ 22,651 $ 15,296Monthly Amortization Payment $ 136,719 $ 118,844 $ 103,453 $ 85,858

Total Employer Contribution2 $ 182,660 $ 151,415 $ 126,104 $ 101,154

1 The Valuation Assets include assets from Surplus divisions, if any.

2 If assets exceed accrued liabilities for a division, the division’s amortization payment is negative and is used to reduce the division’s employercontribution requirement. If the overfunding credit is larger than the normal cost, the division’s full credit is included in the municipality’s amortizationpayment above but the division’s total contribution requirement is zero. This can cause the displayed normal cost and amortization payment to notadd up to the displayed total employer contribution.




Projection Scenarios

The next two pages show projections of the plan's funded ratio and computed employer contributionsunder the actuarial assumptions used in the valuation and alternate assumed long-term investmentreturn assumption scenarios. All four projections take into account the past investment losses that willcontinue to affect the actuarial rate of return in the short term. Under the 7.75% scenarios in the tableon the next page, two sets of projections are shown:

• Based on the phase-in over 5 fiscal years (beginning in 2017) of the increased contributionrequirements associated with the new actuarial assumptions. This projects your minimumrequired contribution.

• Based on no phase-in of the increased contribution requirements.

The 7.75% scenarios provide an estimate of computed employer contributions based on currentactuarial assumptions, and a projected 7.75% market return. The other two scenarios may be useful ifthe municipality chooses to budget more conservatively, and make contributions in addition to theminimum requirements. The 6.75% and 5.75% projections provide an indication of the potentialrequired employer contribution if MERS were to realize annual investment returns of 6.75% and 5.75%over the long-term.

The projections are shown both in tabular and graphical form in total for the employer. The tables showprojections for six years. The graphs show projections for twenty five years.

Please note that one or more of your divisions trigger the 3 times benefit payout minimum contributionrequirement during the projection period (see table following the projections and the graphs). Thiscontribution requirement was designed so that a plan does not run out of money. This means that ifassets in the plan are not enough to pay 3 years of benefit payouts, a minimum contribution is requiredto raise the level of the assets to be equal to at least 3 years of benefit payments. For a full descriptionof this contribution requirement see the Appendix on the MERS website.





ValuationYear Ending

12/31

Fiscal YearBeginning

4/1Actuarial Accrued

Liability Valuation Assets2Funded

Percentage

Computed AnnualEmployer

Contribution

7.75%1

WITH 5-YEAR PHASE-IN 2017 2019 $ 37,841,216 $ 20,434,057 54% $ 1,443,6962018 2020 39,100,000 21,200,000 54% 1,550,0002019 2021 40,300,000 21,700,000 54% 1,660,0002020 2022 41,300,000 22,900,000 55% 1,680,0002021 2023 42,200,000 24,000,000 57% 1,720,0002022 2024 43,000,000 24,900,000 58% 1,850,000

NO 5-YEAR PHASE-IN 2017 2019 $ 37,841,216 $ 20,434,057 54% $ 1,513,2482018 2020 39,100,000 21,200,000 54% 1,580,0002019 2021 40,300,000 21,700,000 54% 1,650,0002020 2022 41,300,000 23,000,000 56% 1,670,0002021 2023 42,200,000 24,100,000 57% 1,710,0002022 2024 43,000,000 25,000,000 58% 1,830,000

6.75%1

NO 5-YEAR PHASE-IN 2017 2019 $ 42,549,269 $ 20,434,057 48% $ 1,816,9802018 2020 43,900,000 21,000,000 48% 1,920,0002019 2021 45,100,000 21,600,000 48% 2,000,0002020 2022 46,200,000 22,900,000 50% 2,030,0002021 2023 47,200,000 24,200,000 51% 2,090,0002022 2024 48,000,000 25,200,000 53% 2,220,000

5.75%1

NO 5-YEAR PHASE-IN 2017 2019 $ 48,280,220 $ 20,434,057 42% $ 2,191,9202018 2020 49,700,000 20,800,000 42% 2,310,0002019 2021 51,000,000 21,400,000 42% 2,390,0002020 2022 52,100,000 22,900,000 44% 2,430,0002021 2023 53,200,000 24,400,000 46% 2,520,0002022 2024 54,000,000 25,600,000 47% 2,640,000

1 Represents both the interest rate for discounting liabilities and the future investment return assumption on the Market Value of assets.

2 Valuation Assets do not include assets from Surplus divisions, if any.




Notes:

All projected funded percentages are shown with no phase-in.

Notes:

All projected contributions are shown with no phase-in.




Valuation YearEnding 12/31

Fiscal YearBeginning 4/1

7.75%Phase-In

7.75%No Phase-In

6.75%No Phase-In

5.75%No Phase-In

2017 2019 No No No No

2018 2020 No No No No

2019 2021 No No No No

2020 2022 No No No No

2021 2023 No No 01 01

2022 2024 01 01 01 01

This table shows in any given year which division(s) are impacted by the 3 times benefit payoutminimum required contribution. If “No” appears in the table, it means none of the divisions areimpacted.




Employer Contribution Details For the Fiscal YearBeginning April 1, 2019

Table 1

Division

TotalNormal

Cost

EmployeeContribut.

Rate

Employer Contributions1ComputedEmployerContribut.

WithPhase-In

BlendedER Rate NoPhase-In5

BlendedER Rate

WithPhase-In5

EmployeeContribut.

ConversionFactor2

EmployerNormal Cost

Payment ofthe Unfunded

AccruedLiability4

ComputedEmployer

Contribut. NoPhase-In

Percentage of Payroll01 - Gnrl 11.97% 7.00% - - - - 77.36% 73.13%02 - PoliceUnion 20.73% 8.00% - - - - 57.63% 55.20%10 - GELC 13.28% 2.50% - - - - 29.96% 28.05%11 - Sprvsr Prsnl 14.22% 3.00% - - - - 29.96% 28.05%12 - Gen.New Hires afte 7.96% 2.00% 5.96% -0.04% 5.92% 5.92% 29.96% 28.05% 0.79%13 - New Hires Div 01 10.65% 7.00% 3.65% 0.14% 3.79% 3.79% 77.36% 73.13% 0.75%22 - Police New Hires a 7.90% 3.50% 4.40% 0.21% 4.61% 4.61% 57.63% 55.20% 0.82%

Estimated Monthly Contribution3

01 - Gnrl $ 296 $ 9,979 $ 10,275 $ 9,69702 - PoliceUnion 14,485 82,630 97,115 92,89510 - GELC 1,697 3,256 4,953 4,42311 - Sprvsr Prsnl 2,335 7,459 9,794 9,32612 - Gen.New Hires afte 940 (7) 933 93313 - New Hires Div 01 281 11 292 29222 - Police New Hires a 2,617 125 2,742 2,742Total Municipality $ 22,651 $ 103,453 $ 126,104 $ 120,308

Estimated Annual Contribution3 $ 271,812 $ 1,241,436 $ 1,513,248 $ 1,443,6961 The above employer contribution requirements are in addition to the employee contributions, if any.

2 If employee contributions are increased/decreased by 1.00% of pay, the employer contribution requirement will decrease/increase by the Employee Contribution Conversion Factor. The conversionfactor is usually under 1%, because employee contributions may be refunded at termination of employment, and not used to fund retirement pensions. Employer contributions will all be used tofund pensions.

3 For divisions that are open to new hires, estimated contributions are based on projected fiscal year payroll. Actual contributions will be based on actual reported monthly pays, and will be differentfrom the above amounts. For divisions that will have no new hires (i.e. closed divisions), invoices will be based on the above dollar amounts which are based on projected fiscal year payroll. Seedescription of Open Divisions and Closed Divisions in the Appendix.

http://retirement.cbiz.com/




4 If projected assets exceed projected liabilities as of the beginning of the April 1, 2019 fiscal year, the negative unfunded accrued liability is treated as overfunding credit and is used to reduce thecontribution. This amortization is used to reduce the employer contribution rate. Note that if the overfunding credit is larger than the normal cost, the full credit is shown above but the totalcontribution requirement is zero. This will cause the displayed normal cost and unfunded accrued liability contributions to not add across.

5 For linked divisions, the employer will be invoiced the Computed Employer Contribution with Phase-in rate shown above for each linked division (a contribution rate for the open division; acontribution dollar for the closed-but-linked division), unless the employer elects to contribute the Blended Employer Contribution rate shown above, by contacting MERS at 800-767-MERS (6377).

Please see the Comments on Asset Smoothing in the Executive Summary of this report.




Benefit Provisions

Table 2

01 - Gnrl: Closed to new hires, linked to Division 132017 Valuation 2016 Valuation

Benefit Multiplier: Bridged Benefit: 3.00% Multiplier (80%max) Frozen FAC; to 1.50% Multiplier (nomax)

Bridged Benefit: 3.00% Multiplier (80%max) Frozen FAC; to 1.50% Multiplier (nomax)

Bridged Benefit Date: 11/30/2016 11/30/2016Normal Retirement Age: 60 60Vesting: 8 years 8 yearsEarly Retirement (Unreduced): 55/15 55/15

25 and Out 25 and OutEarly Retirement (Reduced): - -Final Average Compensation: 3 years 3 yearsCOLA for Future Retirees: 2.50% (Non-Compound) 2.50% (Non-Compound)Employee Contributions: 7% 7%Act 88: Yes (Adopted 10/26/1970) Yes (Adopted 10/26/1970)

02 - PoliceUnion: Closed to new hires, linked to Division 222017 Valuation 2016 Valuation

Benefit Multiplier: 3.00% Multiplier (80% max) 3.00% Multiplier (80% max)Normal Retirement Age: 60 60Vesting: 10 years 10 yearsEarly Retirement (Unreduced): 55/15 55/15

25 and Out 25 and OutEarly Retirement (Reduced): - -Final Average Compensation: 3 years 3 yearsCOLA for Future Retirees: 2.50% (Non-Compound) 2.50% (Non-Compound)Employee Contributions: 8% 7%RS50% Percentage: 50% 50%Act 88: Yes (Adopted 10/26/1970) Yes (Adopted 10/26/1970)

10 - GELC: Closed to new hires, linked to Division 122017 Valuation 2016 Valuation

Benefit Multiplier: 2.50% Multiplier (80% max) 2.50% Multiplier (80% max)Normal Retirement Age: 60 60Vesting: 10 years 10 yearsEarly Retirement (Unreduced): 55/15 55/15Early Retirement (Reduced): 50/25 50/25Final Average Compensation: 5 years 5 yearsCOLA for Future Retirees: 2.50% (Non-Compound) 2.50% (Non-Compound)Employee Contributions: 2.50% 2%Act 88: Yes (Adopted 10/26/1970) Yes (Adopted 10/26/1970)




Table 2 (continued)

11 - Sprvsr Prsnl: Closed to new hires, linked to Division 122017 Valuation 2016 Valuation

Benefit Multiplier: 2.50% Multiplier (80% max) 2.50% Multiplier (80% max)Normal Retirement Age: 60 60Vesting: 10 years 10 yearsEarly Retirement (Unreduced): 55/15 55/15Early Retirement (Reduced): 50/25 50/25Final Average Compensation: 3 years 3 yearsCOLA for Future Retirees: 2.50% (Non-Compound) 2.50% (Non-Compound)Employee Contributions: 3% 2%Act 88: Yes (Adopted 10/26/1970) Yes (Adopted 10/26/1970)

12 - Gen.New Hires after 4/1/2014: Open Division, linked to Division 10, 112017 Valuation 2016 Valuation

Benefit Multiplier: 1.50% Multiplier (no max) 1.50% Multiplier (no max)Normal Retirement Age: 60 60Vesting: 10 years 10 yearsEarly Retirement (Unreduced): 55/15 55/15Early Retirement (Reduced): 50/25 50/25Final Average Compensation: 3 years 3 yearsEmployee Contributions: 2% 2%Act 88: Yes (Adopted 10/26/1970) Yes (Adopted 10/26/1970)

13 - New Hires Div 01: Open Division, linked to Division 012017 Valuation 2016 Valuation

Benefit Multiplier: 1.50% Multiplier (no max) 1.50% Multiplier (no max)Normal Retirement Age: 60 60Vesting: 10 years 10 yearsEarly Retirement (Unreduced): 55/15 55/15Early Retirement (Reduced): 50/25 50/25Final Average Compensation: 5 years 5 yearsCOLA for Future Retirees: 2.50% (Non-Compound) 2.50% (Non-Compound)Employee Contributions: 7% 7%Act 88: No No

22 - Police New Hires aft 4/1/2014: Open Division, linked to Division 022017 Valuation 2016 Valuation

Benefit Multiplier: 1.50% Multiplier (80% max) 1.50% Multiplier (80% max)Normal Retirement Age: 60 60Vesting: 10 years 10 yearsEarly Retirement (Unreduced): 55/15 55/15

25 and Out 25 and OutEarly Retirement (Reduced): - -Final Average Compensation: 3 years 3 yearsEmployee Contributions: 3.50% 3.50%Act 88: Yes (Adopted 10/26/1970) Yes (Adopted 10/26/1970)




Participant Summary

Table 3

Division

2017 Valuation 2016 Valuation 2017 Valuation

NumberAnnualPayroll1 Number

AnnualPayroll1

AverageAge

AverageBenefit

Service2

AverageEligibilityService2

01 - GnrlActive Employees 4 $ 125,056 4 $ 125,476 61.7 10.1 17.3Vested Former Employees 1 1,758 2 7,509 53.0 4.0 19.3Retirees and Beneficiaries 16 294,394 15 285,124 75.2

02 - PoliceUnionActive Employees 22 $ 1,548,192 23 $ 1,543,983 44.0 17.9 17.9Vested Former Employees 3 28,070 4 28,609 49.3 6.6 15.6Retirees and Beneficiaries 28 1,300,895 26 1,229,236 59.8

10 - GELCActive Employees 4 $ 216,317 6 $ 316,371 53.1 19.8 19.8Vested Former Employees 0 0 0 0 0.0 0.0 0.0Retirees and Beneficiaries 8 178,053 7 130,791 67.5

11 - Sprvsr PrsnlActive Employees 4 $ 245,015 4 $ 238,228 49.2 13.0 13.0Vested Former Employees 2 15,816 2 15,816 47.7 7.0 11.5Retirees and Beneficiaries 8 231,041 8 226,889 70.8

12 - Gen.New Hires afterActive Employees 3 $ 116,593 1 $ 5,616 45.1 1.6 1.6Vested Former Employees 0 0 0 0 0.0 0.0 0.0Retirees and Beneficiaries 0 0 0 0 0.0

13 - New Hires Div 01Active Employees 2 $ 25,815 2 $ 23,216 51.4 1.8 1.8Vested Former Employees 0 0 0 0 0.0 0.0 0.0Retirees and Beneficiaries 0 0 0 0 0.0

22 - Police New Hires aftActive Employees 9 $ 365,596 7 $ 229,467 31.1 1.7 1.8Vested Former Employees 0 0 0 0 0.0 0.0 0.0Retirees and Beneficiaries 0 0 0 0 0.0

Total MunicipalityActive Employees 48 $ 2,642,584 47 $ 2,482,357 44.6 12.3 12.9Vested Former Employees 6 45,644 8 51,934 49.4 6.3 14.9Retirees and Beneficiaries 60 2,004,383 56 1,872,040 66.4Total Participants 114 111

1 Annual payroll for active employees; annual deferred benefits payable for vested former employees; annual benefits being paid for retirees andbeneficiaries.

2 Description can be found under Miscellaneous and Technical Assumptions in the Appendix.





Reported Assets (Market Value)

Table 4

Division

2017 Valuation 2016 ValuationEmployer and

Retiree1 Employee2Employer and

Retiree1 Employee2

01 - Gnrl $ 1,286,069 $ 43,456 $ 1,279,283 $ 39,51002 - PoliceUnion 13,051,277 1,365,790 11,644,423 1,275,38410 - GELC 2,467,596 33,279 2,259,180 40,63011 - Sprvsr Prsnl 1,839,931 41,391 1,751,329 36,54612 - Gen.New Hires after 4/1/2014 17,817 3,974 28 913 - New Hires Div 01 537 2,529 (509) 71022 - Police New Hires aft 4/1/2014 30,264 21,402 13,095 9,884Municipality Total $ 18,693,491 $ 1,511,821 $ 16,946,829 $ 1,402,673Combined Assets $20,205,312 $18,349,5021 Reserve for Employer Contributions and Benefit Payments

2 Reserve for Employee Contributions

The December 31, 2017 valuation assets (actuarial value of assets) are equal to 1.011321 times thereported market value of assets (compared to 1.077095 as of December 31, 2016). The derivation ofvaluation assets is described, and detailed calculations of valuation assets are shown, in the Appendix.





Flow of Valuation Assets

Table 5Investment

Year Income Employee ValuationEnded Employer Contributions Employee (Valuation Benefit Contribution Net Asset12/31 Required Additional Contributions Assets) Payments Refunds Transfers Balance

2007 $ 671,407 $ 146,906 $ 1,069,264 $ (829,395) $ (5,327) $ 106,533 $ 14,276,1232008 784,685 155,053 696,563 (863,673) 0 0 15,048,7512009 755,398 150,190 752,301 (986,786) (978) 0 15,718,8762010 766,918 134,287 843,538 (1,219,079) 0 0 16,244,5402011 739,328 $ 0 128,724 801,458 (1,352,361) (1,519) 0 16,560,170

2012 875,950 0 127,040 741,143 (1,388,796) (23,249) 0 16,892,2582013 924,352 0 126,733 1,013,267 (1,432,306) 0 152,734 17,677,0382014 967,411 0 144,479 1,034,504 (1,547,781) 0 235,512 18,511,1632015 1,047,692 50,000 138,966 920,722 (1,670,431) 0 0 18,998,1122016 1,152,968 0 135,496 1,016,768 (1,786,098) (50,528) 297,439 19,764,157

2017 1,246,874 10,416 157,055 1,178,001 (1,920,496) (1,950) 0 20,434,057

Notes:

Transfers in and out are usually related to the transfer of participants between municipalities, and to employer and employee payments for service credit purchases (if any) that the governing bodyhas approved.

Additional employer contributions, if any, are shown separately starting in 2011. Prior to 2011, additional contributions are combined with the required employer contributions.

The investment income column reflects the recognized investment income based on Valuation Assets. It does not reflect the market value investment return in any given year.

The Valuation Assets include assets from Surplus divisions, if any.




Actuarial Accrued Liabilities and Valuation AssetsAs of December 31, 2017

Table 6

DivisionActuarial

Accrued Liability Valuation Assets1 Percent Funded

Unfunded(Overfunded)

AccruedLiabilities

01 - GnrlActive Employees $ 367,315 $ 36,450 9.9% $ 330,865Vested Former Employees 22,176 1,849 8.3% 20,327Retirees And Beneficiaries 2,634,473 1,301,121 49.4% 1,333,352Pending Refunds 5,157 5,157 100.0% 0

Total $ 3,029,121 $ 1,344,577 44.4% $ 1,684,54402 - PoliceUnion

Active Employees $ 10,925,947 $ 1,362,749 12.5% $ 9,563,198Vested Former Employees 269,263 3,009 1.1% 266,254Retirees And Beneficiaries 17,297,698 13,214,493 76.4% 4,083,205Pending Refunds 32 32 100.0% 0

Total $ 28,492,940 $ 14,580,283 51.2% $ 13,912,65710 - GELC

Active Employees $ 985,975 $ 443,159 44.9% $ 542,816Vested Former Employees 0 0 0.0% 0Retirees And Beneficiaries 2,086,028 2,086,028 100.0% 0Pending Refunds 0 0 0.0% 0

Total $ 3,072,003 $ 2,529,187 82.3% $ 542,81611 - Sprvsr Prsnl

Active Employees $ 857,952 $ 36,534 4.3% $ 821,418Vested Former Employees 54,126 4,116 7.6% 50,010Retirees And Beneficiaries 2,240,760 1,861,228 83.1% 379,532Pending Refunds 742 742 100.0% 0

Total $ 3,153,580 $ 1,902,620 60.3% $ 1,250,96012 - Gen.New Hires after 4/1/2014

Active Employees $ 20,967 $ 21,707 103.5% $ (740)Vested Former Employees 0 0 0.0% 0Retirees And Beneficiaries 0 0 0.0% 0Pending Refunds 331 331 100.0% 0

Total $ 21,298 $ 22,038 103.5% $ (740)13 - New Hires Div 01

Active Employees $ 4,512 $ 3,101 68.7% $ 1,411Vested Former Employees 0 0 0.0% 0Retirees And Beneficiaries 0 0 0.0% 0Pending Refunds 0 0 0.0% 0

Total $ 4,512 $ 3,101 68.7% $ 1,411




Table 6 (continued)

DivisionActuarial

Accrued Liability Valuation Assets1 Percent Funded


AccruedLiabilities

22 - Police New Hires aft 4/1/2014Active Employees $ 67,478 $ 51,967 77.0% $ 15,511Vested Former Employees 0 0 0.0% 0Retirees And Beneficiaries 0 0 0.0% 0Pending Refunds 284 284 100.0% 0

Total $ 67,762 $ 52,251 77.1% $ 15,511Total Municipality

Active Employees $ 13,230,146 $ 1,955,667 14.8% $ 11,274,479Vested Former Employees 345,565 8,974 2.6% 336,591Retirees and Beneficiaries 24,258,959 18,462,870 76.1% 5,796,089Pending Refunds 6,546 6,546 100.0% 0Total $ 37,841,216 $ 20,434,057 54.0% $ 17,407,159

The following results show the combined accrued liabilities and assets for each set of linked divisions. These results arealready included in the table above.

Linked Divisions 13, 01Active Employees $ 371,827 $ 39,551 10.6% $ 332,276Vested Former Employees 22,176 1,849 8.3% 20,327Retirees and Beneficiaries 2,634,473 1,301,121 49.4% 1,333,352Pending Refunds 5,157 5,157 100.0% 0

Total $ 3,033,633 $ 1,347,678 44.4% $ 1,685,955Linked Divisions 22, 02

Active Employees $ 10,993,425 $ 1,414,716 12.9% $ 9,578,709Vested Former Employees 269,263 3,009 1.1% 266,254Retirees and Beneficiaries 17,297,698 13,214,493 76.4% 4,083,205Pending Refunds 316 316 100.0% 0

Total $ 28,560,702 $ 14,632,534 51.2% $ 13,928,168Linked Divisions 12, 10, 11

Active Employees $ 1,864,894 $ 501,400 26.9% $ 1,363,494Vested Former Employees 54,126 4,116 7.6% 50,010Retirees and Beneficiaries 4,326,788 3,947,256 91.2% 379,532Pending Refunds 1,073 1,073 100.0% 0

Total $ 6,246,881 $ 4,453,845 71.3% $ 1,793,0361 Includes both employer and employee assets.

Please see the Comments on Asset Smoothing in the Executive Summary of this report.




Actuarial Accrued Liabilities - Comparative Schedule

Table 7

Valuation DateDecember 31

ActuarialAccrued Liability Valuation Assets

PercentFunded


AccruedLiabilities

2003 $ 14,859,961 $ 10,779,206 73% $ 4,080,7552004 15,968,305 11,438,725 72% 4,529,5802005 18,774,360 12,173,760 65% 6,600,6002006 20,203,864 13,116,735 65% 7,087,1292007 21,497,683 14,276,123 66% 7,221,560

2008 23,817,442 15,048,751 63% 8,768,6912009 23,973,416 15,718,876 66% 8,254,5402010 26,571,464 16,244,540 61% 10,326,9242011 27,667,586 16,560,170 60% 11,107,4162012 28,304,401 16,892,258 60% 11,412,143

2013 29,790,582 17,677,038 59% 12,113,5442014 32,025,098 18,511,163 58% 13,513,9352015 34,392,066 18,998,112 55% 15,393,9542016 36,091,168 19,764,157 55% 16,327,0112017 37,841,216 20,434,057 54% 17,407,159

Notes: Actuarial assumptions were revised for the 2004, 2008, 2009, 2010, 2011, 2012 and 2015 actuarial valuations.

The Valuation Assets include assets from Surplus divisions, if any.




Division 01 - Gnrl

Table 8-01: Actuarial Accrued Liabilities - Comparative Schedule


ActuarialAccrued Liability Valuation Assets Percent Funded


AccruedLiabilities

2007 $ 2,524,898 $ 2,400,349 95% $ 124,5492008 2,690,610 2,351,257 87% 339,3532009 2,912,673 2,183,407 75% 729,2662010 2,972,862 2,083,353 70% 889,5092011 3,035,128 1,973,992 65% 1,061,136

2012 3,050,438 1,848,377 61% 1,202,0612013 3,061,827 1,719,708 56% 1,342,1192014 3,021,013 1,606,457 53% 1,414,5562015 3,126,780 1,519,007 49% 1,607,7732016 3,051,965 1,420,465 47% 1,631,500

2017 3,029,121 1,344,577 44% 1,684,544

Notes: Actuarial assumptions were revised for the 2008, 2009, 2010, 2011, 2012 and 2015 actuarial valuations.

Table 9-01: Computed Employer Contributions - Comparative ScheduleActive Employees Computed Employee

Valuation Date Annual Employer Contribution

December 31 Number Payroll Contribution1 Rate2

2007 7 $ 243,664 20.81% 3.01%2008 3 55,935 51.39% 3.01%2009 6 164,267 41.10% 3.01%2010 6 162,054 47.18% 3.01%2011 6 161,417 53.94% 3.01%

2012 6 151,974 65.48% 3.01%2013 6 150,698 72.92% 3.01%2014 6 144,793 77.71% 3.01%2015 6 150,696 87.14% 3.01%2016 4 125,476 $ 9,665 7.00%

2017 4 125,056 $ 10,275 7.00%

1 For open divisions, a percent of pay contribution is shown. For closed divisions, a monthly dollar contribution is shown.

2 For each valuation year, the computed employer contribution is based on the employee rate. If the employee ratechanges during the applicable fiscal year, the computed employer contribution will be adjusted.

Note: The contributions shown in Table 9 for the 12/31/2015 through 12/31/2019 valuations do not reflect the phase-inof the increased contribution requirements associated with the new actuarial assumptions. The full contribution withoutphase-in is shown in Table 9 above. The contribution requirements including the 5-year phase-in are shown on page 6.

See the Benefit Provision History on page 42 for past benefit provision changes.




Division 02 - PoliceUnion





AccruedLiabilities

2007 $ 14,253,270 $ 8,176,704 57% $ 6,076,5662008 16,037,964 8,880,872 55% 7,157,0922009 15,832,017 9,653,005 61% 6,179,0122010 18,186,080 10,198,593 56% 7,987,4872011 19,220,532 10,532,831 55% 8,687,701

2012 19,680,527 10,896,744 55% 8,783,7832013 21,051,485 11,682,486 56% 9,368,9992014 23,076,113 12,552,368 54% 10,523,7452015 25,503,824 13,097,467 51% 12,406,3572016 27,007,643 13,915,860 52% 13,091,783

2017 28,492,940 14,580,283 51% 13,912,657





2007 34 $ 2,066,063 27.50% 6.28%2008 34 2,262,554 30.60% 6.28%2009 33 2,144,404 28.32% 6.28%2010 28 1,778,360 37.48% 6.28%2011 30 1,860,683 38.58% 6.28%

2012 28 1,794,353 42.45% 6.28%2013 30 1,869,916 43.49% 6.28%2014 28 1,787,531 $ 74,980 7.00%2015 27 1,734,831 $ 90,330 7.00%2016 23 1,543,983 $ 92,874 7.00%

2017 22 1,548,192 $ 97,115 8.00%








Division 10 - GELC





AccruedLiabilities

2007 $ 1,720,928 $ 1,528,221 89% $ 192,7072008 1,927,158 1,639,664 85% 287,4942009 1,936,364 1,769,727 91% 166,6372010 2,074,885 1,897,282 91% 177,6032011 2,028,650 2,027,790 100% 860

2012 2,129,315 2,163,956 102% (34,641)2013 2,312,186 2,314,371 100% (2,185)2014 2,545,367 2,394,560 94% 150,8072015 2,812,434 2,433,603 87% 378,8312016 2,927,908 2,477,114 85% 450,794

2017 3,072,003 2,529,187 82% 542,816





2007 8 $ 364,797 13.35% 1.13%2008 10 475,206 14.40% 1.13%2009 9 439,347 13.42% 1.13%2010 8 415,697 13.81% 1.13%2011 8 419,476 11.40% 1.13%

2012 8 424,668 10.58% 1.13%2013 7 368,790 11.82% 1.13%2014 6 311,171 $ 3,462 2.00%2015 6 307,541 $ 4,998 2.00%2016 6 316,371 $ 5,333 2.00%

2017 4 216,317 $ 4,953 2.50%








Division 11 - Sprvsr Prsnl





AccruedLiabilities

2007 $ 2,998,587 $ 2,170,849 72% $ 827,7382008 3,161,710 2,176,958 69% 984,7522009 3,292,362 2,112,737 64% 1,179,6252010 3,337,637 2,065,312 62% 1,272,3252011 3,383,276 2,025,557 60% 1,357,719

2012 3,444,121 1,983,181 58% 1,460,9402013 3,365,084 1,960,473 58% 1,404,6112014 3,379,913 1,955,233 58% 1,424,6802015 2,940,042 1,938,158 66% 1,001,8842016 3,072,656 1,925,711 63% 1,146,945

2017 3,153,580 1,902,620 60% 1,250,960





2007 7 $ 305,067 25.73% 1.22%2008 6 284,482 29.82% 1.22%2009 4 198,676 43.97% 1.22%2010 4 200,105 45.61% 1.22%2011 4 194,559 49.75% 1.22%

2012 4 221,017 51.27% 1.22%2013 4 209,799 52.05% 1.22%2014 4 224,102 $ 9,641 2.00%2015 4 230,909 $ 7,791 2.00%2016 4 238,228 $ 9,058 2.00%

2017 4 245,015 $ 9,794 3.00%








Division 12 - Gen.New Hires after 4/1/2014





AccruedLiabilities

2016 413 40 10% 3732017 21,298 22,038 104% (740)





2016 1 5,616 5.56% 2.00%2017 3 116,593 5.92% 2.00%








Division 13 - New Hires Div 01





AccruedLiabilities

2016 $ 1,296 $ 216 17% $ 1,0802017 4,512 3,101 69% 1,411





2016 2 $ 23,216 3.76% 7.00%2017 2 25,815 3.79% 7.00%








Division 22 - Police New Hires aft 4/1/2014





AccruedLiabilities

2014 $ 2,692 $ 2,545 95% $ 1472015 8,986 9,877 110% (891)2016 29,287 24,751 85% 4,5362017 67,762 52,251 77% 15,511





2014 2 $ 63,258 3.98% 3.50%2015 3 98,298 4.05% 3.50%2016 7 229,467 4.46% 3.50%2017 9 365,596 4.61% 3.50%








Division 01 - Gnrl

Table 10-01: Layered Amortization ScheduleAmounts for Fiscal Year Beginning 4/1/2019

Type of UALDate

Established Original Balance1

OriginalAmortization

Period2Outstanding

UAL Balance3

RemainingAmortization

Period2

AnnualAmortization

Payment

Initial 12/31/2015 $ 1,607,773 23 $ 1,674,966 21 $ 117,720

(Gain)/Loss 12/31/2016 48,279 22 53,357 21 3,756

Plan Amendments 12/31/2016 (61,595) 22 (68,075) 21 (4,788)

(Gain)/Loss 12/31/2017 39,626 21 43,501 21 3,060

Total $ 1,703,749 $ 119,748

1 For each type of UAL (layer), this is the original balance as of the date the layer was established.

2 According to the MERS amortization policy, each type of UAL (layer) is amortized over a specific period (see Appendix on MERS website).

3 This is the remaining balance as of the valuation date, projected to the beginning of the fiscal year shown above.

The unfunded accrued liability (UAL) as of December 31, 2017 (see Table 6) is projected to thebeginning of the fiscal year for which the contributions are being calculated. This allows the 2017valuation to take into account the expected future contributions that are based on past valuations. Eachtype of UAL (layer) is amortized over the appropriate period. Please see the Appendix on the MERSwebsite for a detailed description of the amortization policy.






Division 02 - PoliceUnion


Type of UALDate



Period2Outstanding

UAL Balance3


Period2

AnnualAmortization

Payment

Initial 12/31/2015 $ 12,406,357 23 $ 12,979,266 21 $ 912,216

(Gain)/Loss 12/31/2016 382,584 22 422,809 21 29,712

(Gain)/Loss 12/31/2017 626,034 21 687,258 21 48,300

Plan Amendments 12/31/2017 17,197 21 18,879 21 1,332

Total $ 14,108,212 $ 991,560










Division 10 - GELC


Type of UALDate



Period2Outstanding

UAL Balance3


Period2

AnnualAmortization

Payment

Initial 12/31/2015 $ 378,831 23 $ 413,445 21 $ 29,064

(Gain)/Loss 12/31/2016 50,114 22 55,379 21 3,888

(Gain)/Loss 12/31/2017 79,495 21 87,269 21 6,132

Plan Amendments 12/31/2017 (181) 21 (199) 21 (12)

Total $ 555,894 $ 39,072










Division 11 - Sprvsr Prsnl


Type of UALDate



Period2Outstanding

UAL Balance3


Period2

AnnualAmortization

Payment

Initial 12/31/2015 $ 1,001,884 23 $ 1,002,780 21 $ 70,476

(Gain)/Loss 12/31/2016 156,793 22 173,282 21 12,180

(Gain)/Loss 12/31/2017 90,955 21 99,850 21 7,020

Plan Amendments 12/31/2017 (2,196) 21 (2,411) 21 (168)

Total $ 1,273,501 $ 89,508










Division 12 - Gen.New Hires after 4/1/2014


Type of UALDate



Period2Outstanding

UAL Balance3


Period2

AnnualAmortization

Payment

(Gain)/Loss 12/31/2017 $ (808) 15 $ (887) 15 $ (84)

Total $ (887) $ (84)










Division 13 - New Hires Div 01


Type of UALDate



Period2Outstanding

UAL Balance3


Period2

AnnualAmortization

Payment

(Gain)/Loss 12/31/2016 $ 1,038 15 $ 1,129 14 $ 108

(Gain)/Loss 12/31/2017 292 15 321 15 24

Total $ 1,450 $ 132










Division 22 - Police New Hires aft 4/1/2014


Type of UALDate



Period2Outstanding

UAL Balance3


Period2

AnnualAmortization

Payment

(Gain)/Loss 12/31/2016 $ 4,842 15 $ 5,242 14 $ 492

(Gain)/Loss 12/31/2017 10,323 15 11,332 15 1,008

Total $ 16,574 $ 1,500










GASB 68 Information

The following information has been prepared to provide some of the information necessary to completeGASB Statement No. 68 disclosures. Statement 68 is effective for fiscal years beginning after June 15,2014. Additional resources, including an Implementation Guide, are available at www.mersofmich.com.

Actuarial Valuation Date: 12/31/2017

Measurement Date of Total Pension Liability (TPL): 12/31/2017

At 12/31/2017, the following employees were covered by the benefit terms:

Inactive employees or beneficiaries currently receiving benefits: 60Inactive employees entitled to but not yet receiving benefits: 6Active employees: 48

114

Covered employee payroll: (Needed for Required Supplementary Information) $ 2,642,584

Average expected remaining service lives of all employees (active and inactive): 3

Total Pension Liability as of 12/31/2016 measurement date: $ 35,075,191


Service Cost for the year ending on the 12/31/2017 measurement date: $ 410,461

Change in the Total Pension Liability due to:

- Benefit changes1: $ 13,478- Differences between expected and actual experience2: $ 473,791- Changes in assumptions2: $ 0

1 A change in liability due to benefit changes is immediately recognized when calculating pension expense for the year.

2 Changes in liability due to differences between actual and expected experience, and changes in assumptions, are recognized in pensionexpense over the average remaining service lives of all employees.

Sensitivity of the Net Pension Liability to changes in the discount rate:1% Decrease Current Discount 1% Increase

(7.00%) Rate (8.00%) (9.00%)Change in Net Pension Liability as of 12/31/2017: $ 4,490,389 - $ (3,736,978)

Note: The current discount rate shown for GASB 68 purposes is higher than the MERS assumed rate of return.This is because for GASB 68 purposes, the discount rate must be gross of administrative expenses, whereasfor funding purposes it is net of administrative expenses.


http://www.mersofmich.com



GASB 68 Information

This page is for those municipalities who need to “roll-forward” their total pension liability due to thetiming of completion of the actuarial valuation in relation to their fiscal year-end.

The following information has been prepared to provide some of the information necessary to completeGASB Statement No. 68 disclosures. Statement 68 is effective for fiscal years beginning after June 15,2014. Additional resources, including an Implementation Guide, are available at www.mersofmich.com.

Actuarial Valuation Date: 12/31/2017

Measurement Date of Total Pension Liability (TPL): 12/31/2018

At 12/31/2017, the following employees were covered by the benefit terms:

Inactive employees or beneficiaries currently receiving benefits: 60Inactive employees entitled to but not yet receiving benefits: 6Active employees: 48

114

Covered employee payroll: (Needed for Required Supplementary Information) $ 2,642,584

Average expected remaining service lives of all employees (active and inactive): 3



Service Cost for the year ending on the 12/31/2018 measurement date: $ 410,554

Change in the Total Pension Liability due to:

- Benefit changes1: $ 19,127- Differences between expected and actual experience2: $ 494,378- Changes in assumptions2: $ 0

1 A change in liability due to benefit changes is immediately recognized when calculating pension expense for the year.

2 Changes in liability due to differences between actual and expected experience, and changes in assumptions, are recognized in pensionexpense over the average remaining service lives of all employees.

Sensitivity of the Net Pension Liability to changes in the discount rate:1% Decrease Current Discount 1% Increase

(7.00%) Rate (8.00%) (9.00%)Change in Net Pension Liability as of 12/31/2018: $ 4,562,807 - $ (3,801,563)

Note: The current discount rate shown for GASB 68 purposes is higher than the MERS assumed rate of return.This is because for GASB 68 purposes, the discount rate must be gross of administrative expenses, whereasfor funding purposes it is net of administrative expenses.


http://www.mersofmich.com



Benefit Provision History

The following benefit provision history is provided by MERS. Any corrections to this history ordiscrepancies between this information and information displayed elsewhere in the valuation reportshould be reported to MERS. All provisions are listed by date of adoption.

01 - Gnrl12/1/2016 Service Credit Purchase Estimates - No12/1/2016 Benefit C-1 (New)12/1/2016 Participant Contribution Rate 7%

11/30/2016 Frozen FAC3/1/2007 3.0% Multiplier (80% max)

11/1/2004 25 Years & Out11/1/2004 Benefit RS 50 (50% Post-Ret. Spouse Benefits)5/1/2004 8 Year Vesting5/1/2004 Member Contribution Rate 3.01%9/1/2000 Benefit FAC-3 (3 Year Final Average Compensation)9/1/2000 Benefit B-4 (80% max)9/1/2000 Member Contribution Rate 2.41%

12/1/1987 Benefit B-3 (80% max)10/1/1981 Member Contribution Rate 0.00%3/24/1975 Exclude Temporary Employees11/1/1974 Benefit F55 (With 15 Years of Service)

10/26/1970 Covered by Act 881/1/1970 E2 2.5% COLA for future retirees (11/10/1969)

11/1/1969 Benefit F55 (With 25 Years of Service)11/1/1966 Benefit C-1 (Old)5/1/1966 Benefit FAC-5 (5 Year Final Average Compensation)5/1/1966 10 Year Vesting5/1/1966 Benefit C (Old)5/1/1966 Fiscal Month - January5/1/1966 Member Contribution Rate 3.00% Under $4,200.00 - Then 5.00%

Defined Benefit Normal Retirement Age - 60 Early Reduced (.5%) at Age 50 with 25 Years or Age 55 with 15 Years

02 - PoliceUnion4/1/2017 Participant Contribution Rate 8%

12/1/2016 Service Credit Purchase Estimates - No4/1/2014 Member Contribution Rate 7.00%

6/26/2006 Day of work defined as 148 Hours a Month for All employees.8/1/2005 3.0% Multiplier (80% max)8/1/2005 Member Contribution Rate 6.28%

12/1/2003 Benefit RS 50 (50% Post-Ret. Spouse Benefits)12/1/2003 Member Contribution Rate 2.39%4/1/2000 25 Years & Out4/1/2000 Benefit FAC-3 (3 Year Final Average Compensation)4/1/2000 Benefit B-4 (80% max)




02 - PoliceUnion4/1/2000 Member Contribution Rate 1.73%7/1/1989 Benefit B-3 (80% max)

10/1/1981 Member Contribution Rate 0.00%3/24/1975 Exclude Temporary Employees11/1/1974 Benefit F55 (With 15 Years of Service)

10/26/1970 Covered by Act 881/1/1970 E2 2.5% COLA for future retirees (11/10/1969)

11/1/1966 Benefit C-1 (Old)5/1/1966 Fiscal Month - January5/1/1966 Benefit FAC-5 (5 Year Final Average Compensation)5/1/1966 10 Year Vesting5/1/1966 Benefit C (Old)5/1/1966 Member Contribution Rate 3.00% Under $4,200.00 - Then 5.00%


10 - GELC7/1/2017 Participant Contribution Rate 2.5%

12/1/2016 Service Credit Purchase Estimates - No4/1/2014 Participant Contribution Rate 2%

11/1/2005 Benefit B-4 (80% max)11/1/2005 Member Contribution Rate 1.13%6/1/1987 Benefit B-3 (80% max)7/1/1983 Member Contribution Rate 0.00%

3/24/1975 Exclude Temporary Employees11/1/1974 Benefit FAC-5 (5 Year Final Average Compensation)11/1/1974 10 Year Vesting11/1/1974 Benefit F55 (With 15 Years of Service)

10/26/1970 Covered by Act 881/1/1970 E2 2.5% COLA for future retirees (11/10/1969)5/1/1966 Fiscal Month - January


11 - Sprvsr Prsnl7/1/2017 Participant Contribution Rate 3%

12/1/2016 Service Credit Purchase Estimates - No4/1/2014 Participant Contribution Rate 2%7/1/2004 Benefit B-4 (80% max)7/1/2004 Member Contribution Rate 1.22%1/1/1994 E2 2.5% COLA for future retirees (04/01/1993)4/1/1993 Benefit FAC-3 (3 Year Final Average Compensation)4/1/1993 10 Year Vesting4/1/1993 Benefit B-3 (80% max)4/1/1993 Benefit F55 (With 15 Years of Service)




11 - Sprvsr Prsnl4/1/1993 Member Contribution Rate 0.00%

3/24/1975 Exclude Temporary Employees10/26/1970 Covered by Act 88

5/1/1966 Fiscal Month - January Defined Benefit Normal Retirement Age - 60 Early Reduced (.5%) at Age 50 with 25 Years or Age 55 with 15 Years

12 - Gen.New Hires after 4/1/201412/1/2016 Service Credit Purchase Estimates - No4/1/2014 Participant Contribution Rate 2%4/1/2014 Day of work defined as 100 Hours a Month for All employees.4/1/2014 Benefit FAC-3 (3 Year Final Average Compensation)4/1/2014 Non Standard Compensation Definition4/1/2014 10 Year Vesting4/1/2014 Benefit C-1 (New)4/1/2014 Benefit F55 (With 15 Years of Service)

10/26/1970 Covered by Act 885/1/1966 Fiscal Month - January

Early Reduced (.5%) at Age 50 with 25 Years or Age 55 with 15 Years Defined Benefit Normal Retirement Age - 60

13 - New Hires Div 0112/1/2016 Benefit FAC-5 (5 Year Final Average Compensation)12/1/2016 Non Standard Compensation Definition12/1/2016 10 Year Vesting12/1/2016 Service Credit Purchase Estimates - No12/1/2016 Benefit C-1 (New)12/1/2016 Benefit F55 (With 15 Years of Service)12/1/2016 Participant Contribution Rate 7%12/1/2016 E2 2.5% COLA for future retirees (12/1/2016)5/1/1966 Fiscal Month - January


22 - Police New Hires aft 4/1/201412/1/2016 Service Credit Purchase Estimates - No4/1/2014 Day of work defined as 100 Hours a Month for All employees.4/1/2014 25 Years & Out4/1/2014 Benefit FAC-3 (3 Year Final Average Compensation)4/1/2014 Non Standard Compensation Definition4/1/2014 Exclude Temporary Employees4/1/2014 10 Year Vesting4/1/2014 1.5% multiplier (80% max)4/1/2014 Benefit F55 (With 15 Years of Service)4/1/2014 Member Contribution Rate 3.50%




22 - Police New Hires aft 4/1/201410/26/1970 Covered by Act 88

5/1/1966 Fiscal Month - January Defined Benefit Normal Retirement Age - 60 Early Reduced (.5%) at Age 50 with 25 Years or Age 55 with 15 Years




Plan Provisions, Actuarial Assumptions, and Actuarial Funding Method

Details on MERS plan provisions, actuarial assumptions, and actuarial methodology can be found inthe Appendix. Some actuarial assumptions are specific to this municipality and its divisions. These arelisted below.

Increase in Final Average Compensation

DivisionFAC IncreaseAssumption

01 - Gnrl 2.00%02 - PoliceUnion 2.00%10 - GELC 2.00%11 - Sprvsr Prsnl 2.00%12 - Gen.New Hires after 4/1 2.00%13 - New Hires Div 01 0.00%22 - Police New Hires aft 4/ 2.00%

Withdrawal Rate Scaling Factor

DivisionWithdrawal RateScaling Factor

All Divisions 100%

Miscellaneous and Technical Assumptions

Loads – None.



System design changes:

1. The system's multiplier for employees in "Division 1" was lowered from 3.0x to 1.5x AND increased the employee's contribution rate from 3.01% to 7.0% AND closed the division to new hires effective 12/1/2016.

2. "Division 2" - Increased employee contribution rate from 6.28% to 7.0% AND closed the division to new hires on 4/1/2014. Increased employee contribution rate from 7.0% to 8.0% on 4/1/17. Increased employee contribution rate from 8.0% to 9.0% on 4/1/18.

3. “Division 10” – Increased employee contribution rate from 1.13% to 2.0% AND closed the division to new hires on 4/1/14. Increased employee contribution rate from 2.0% to 2.5% on 7/1/17. Increased employee contribution rate from 2.5% to 3.0% on 4/1/18.

4. “Division 11” - Increased employee contribution rate from 1.22% to 2.0% AND closed the division to new hires on 4/1/14. Increased employee contribution rate from 2.0% to 3.0% on 7/1/17.

For all the changes listed above, see pages 42-46 of the attached annual actuarial valuation