C.A.F.R., FY 2005-06 - Laserfiche WebLink

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City of Paris, Texas Notes to Financial Statements September 30, 2006 V. Other Information (Continued 1. Employee Retirement Systems and Plans (Continued) 1. Texas Municipal Retirement System (Continued) Benefits (Continued) The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. Plan provisions for the City were as follows: Deposit Rate: 6% Matching Ratio (City to Employees): 2 to 1 A member is vested after 5 years Members can retire at certain ages, based on the years of service with the City. The Service Retirement Eligibilities for the City (expressed as years of service/age) are: 5 years/age 60 20 years/any age Contributions Under the state law governing TMRS, the actuary annually determines the City's contribution rate. This rate consists of the normal cost contribution rate and the prior service cost contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to the City matching percent, which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The normal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the obligation of the City to each employee at the time his/her retirement becomes effective. The prior service contribution rate amortizes the unfunded actuarial liability over the remainder of the plan's 25-year amortization period. The unit credit actuarial cost method is used for determining the City's contribution rate. Both the employees and the City make contributions monthly. Since the City needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect. For actuarial valuation, the market related method is used for assets. Other assumptions include no projected salary increases or cost-of-living adjustments, inflation at 3.5%, and the investment rate of return is 7%. The level percent of payroll is the amortization method used. During the past three plan years, the City has contributed 1 00% of its annual pension cost as follows: 2005 - $1,158,159; 2004 - $1,177,209; and 2003 - $1,149,264. At September 30, 2004, 2005, and 2006, the net pension obligation is zero. 49