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CITY OF EUGENE, OREGON
<br />Notes to Basic Financial Statements
<br />(5) Other Information, continued
<br />(C) Retirement Plan, continued
<br />Annual Pension Cost, continued
<br />Annual required contribution $12,013,659
<br />Interest on pension assets (5,007,044)
<br />Adjustment to the annual required contribution 6,374,731
<br />Annual pension cost 13,381,346
<br />Contributions made 12,013,659
<br />Decrease in pension assets (1,367,687)
<br />Pension assets, beginning of year 62,588,051
<br />Pension assets, end of year $61,220,364
<br />For the fiscal year ending June 30, 2009, the City’s annual required contribution rate for PERS and OSRP was
<br />determined using the projected unit credit method.
<br />The actuarial assumptions for the December 31, 2007 PERS and OPSRP actuarial valuations included an
<br />investment return of 8.0% (8.5% for PERS variable account balances), a projected salary growth of 3.75%, and
<br />a projected inflation rate of 2.75%. The PERS actuarial valuation included a healthcare cost inflation trend rate
<br />of 8.0% in 2008 decreasing to 5.0% in 2013. The actuarial value of assets equals the market value of assets.
<br />The unfunded actuarially accrued liability and plan gains and losses are amortized as a level percentage of the
<br />combined valuation payroll over a closed period of 20 years for PERS and 16 years for OPSRP.
<br />Both the PERS and OPSRP defined benefit pension plans utilize a contribution rate stabilization method to
<br />restrict the degree of change to new contribution rates. The new contribution rate will not increase or decrease
<br />from the prior contribution rate by more than the greater of 3 percentage points or 20 percent of the prior
<br />contribution rate. If the plan’s funded percentage drops below 80 percent or increases above 120 percent, the
<br />size of the collar doubles. The actuarial value of assets is equal to their fair market value less contingency,
<br />capital preservation, and rate guarantee reserves.
<br />The Oregon Legislative Assembly created a second level or “Tier” of PERS benefits that modified service and
<br />disability retirement allowances payable to persons who established PERS membership on or after January 1,
<br />1996 (“Tier Two” members). Future interest credits on all member contributions in Tier One and Tier Two
<br />Regular Accounts are assumed to accrue at an annual rate of 8.0%, compounded annually.
<br />The City’s annual pension cost, the contribution, the percentage of annual pension cost contributed to the plan,
<br />and the pension assets for fiscal year ending June 30, 2009 and the preceding two years were as follows:
<br />AnnualPercentage
<br />Fiscal year pension of APC Pension
<br />ending June 30cost (APC) Contribution contributed assets
<br />2007$14,557,97913,385,40892%63,854,428
<br />200812,812,33911,545,96290%62,588,051
<br />200913,381,34612,013,65990%61,220,364
<br />continued
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