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<br />City of Paris, Texas <br />Notes to Financial Statements <br />September 30, 2006 <br /> <br />V. Other Information (Continued) <br /> <br />1. Employee Retirement Systems and Plans (Continued) <br /> <br />2. Firefighters' Relief and Retirement Fund (Continued) <br /> <br />Annual Pension Cost (Continued) <br /> <br />The actuarial assumptions used in the actuarial valuation performed as of January 1, 2005, <br />include a rate of return on the actuarial value of assets of 8.00% per year compounded annually; <br />UP 1994 Mortality Table; termination rates from the Actuary's Pension Handbook; disability <br />rates from 1985 Society of Actuaries Disability Table Study; and assumed retirement age of 55 <br />with 20 years of service or satisfied the rule of 80. Compensation increases for individual <br />members and total payroll is 4.5% compounded annually. Projected post retirement benefit <br />increases are zero. The amortization of the unfunded actuarial accrued liability was determined <br />as a level percentage of payroll. The amortization period is an open amortization period over <br />27.2 years. <br /> <br />The actuarial value of assets is smoothed market value which smoothes interest and dividends <br />as well as investment gains and losses. Calculation of the actuarial value of assets begins with <br />an "initial asset value." <br /> <br />The initial asset value is the market value of assets five years prior to the valuation date. All <br />receipts from contributions, interest, dividends, and miscellaneous income over the last five <br />years are added to the initial asset value. Likewise, all benefit payments, contribution refunds, <br />and expenses are subtracted from the initial asset value. In this manner, all such receipts and <br />disbursements are recognized immediately. <br /> <br /> January 1, <br /> 2001 2003 2005 <br />Actuarial Value of Assets $ 5,661,952 $ 6,128,263 $ 6,967,797 <br />Actuarial Accrued Liability (AAL) 8,379,236 9,676,328 10,802,145 <br />Unfunded AAL (UAAL) $ 2,717,284 $ 3,548,065 $ 3,834,348 <br />Funded Ratio 67.6% 63.3% 64.5% <br />Covered Payroll $ 1,938,970 $ 1,968,378 $ 2,093,252 <br />UAAL as a Percentage of Covered Payroll 140.1% 180.3% 183.2% <br /> <br />52 <br />