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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 />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, 2011 and the preceding two years were as follows:
<br /> Annual Percentage
<br />Fiscal year pension of APC Pension
<br /> contributed
<br />ending June 30
<br />cost (APC)Contributionassets
<br />$
<br />200913,381,34612,013,65990%61,220,364
<br />201010,371,2068,894,10386%59,743,261
<br />201110,683,3859,088,11585%58,147,991
<br />Funded Status and Funding Progress
<br />As of December 31, 2009, the most recent actuarial valuation, the actuarial accrued liability (AAL) for benefits
<br />was $664,728,789, and the actuarial value of assets was $572,595,446, resulting in an unfunded actuarial
<br />liability (UAAL) of $92,133,343. The covered payroll (annual payroll of active employees covered by the plans)
<br />was $89,005,209, and the ratio of the UAAL to the covered payroll was 104.0%.
<br />The schedule of funding progress, presented as Required Supplementary Information following the Notes to
<br />Basic Financial Statements presents multi-year trend information about whether the actuarial value of plan
<br />assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits.
<br />Actuarial Methods and Assumptions
<br />For the fiscal year ending June 30, 2011, the City’s annual required contribution rate for PERS and OSRP was
<br />based on the December 31, 2007 actuarial valuation 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 7.0% in 2010 decreasing to 4.5% in 2029. 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% of the prior contribution
<br />rate. If the plan’s funded percentage drops below 70% or increases above 130%, the size of the collar doubles.
<br />If the funded percentage is between 70% and 80% or between 120% and 130%, the size of the rate collar is
<br />increased on a graded scale. 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 />continued
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