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City of Paris, Texas
<br />Notes to Financial Statements
<br />September 30, 2007
<br />V. Other Information
<br />I. Employee Retirement Systems and Plans (Continued)
<br />1. Texas Municipal Retirement System (Continued)
<br />Contributions
<br />Under the state law governing TMRS, the actuary annually determines the City's contribution
<br />rate. This rate consists of the normal cost contribution rate and the prior service cost
<br />contribution rate, both of which are calculated to be a level percent of payroll from year to
<br />year. The normal cost contribution rate finances the currently accruing monetary credits due to
<br />the City matching percent, which are the obligation of the City as of an employee's retirement
<br />date, not at the time the employee's contributions are made. The normal cost contribution rate
<br />is the actuarially determined percent of payroll necessary to satisfy the obligation of the City to
<br />each employee at the time his/her retirement becomes effective. The prior service contribution
<br />rate amortizes the unfunded actuarial liability over the remainder of the plan's 25-year
<br />amortization period.. The unit credit actuarial cost method is used for determining the City's
<br />contribution rate. Both the employees and the City make contributions monthly. Since the
<br />City needs to know its contribution rate in advance for budgetary purposes, there is a one-year
<br />delay between the actuarial valuation that serves as the basis for the rate and the calendar year
<br />when the rate goes into effect. For actuarial valuation, the market related method is used for
<br />assets. Other assumptions include no projected salary increases or cost-of-living adjustments,
<br />inflation at 3.5%, and the investment rate of return is 7%. The level percent of payroll is the
<br />amortization method used.
<br />During the past three plan years, the City has contributed 100% of its annual pension cost as
<br />follows: 2006 - $1,188,241 , 2005 - $1,158,159; and 2004 - $1,177,209. At September 30,
<br />2005, 2006, and 2007, the net pension obligation is zero.
<br />Schedule of Funding Pro rg ess
<br /> Actuarial
<br /> Liability
<br />Actuarial as a
<br />Valuation Actuarial Actuarial Unfunded Percentage
<br />December Value of Accrued Actuarial Funded Covered of Covered
<br />31, Assets Liability Liability Ratio Payroll Payroll
<br />
<br />2004 $ 21,204,977 $ 28,601,946 $ 7,396,969 74.1% $ 9,547,350 77.5%
<br />2005 21,322,495 29,062,212 7,739,717 73.4 8,887,246 87.1
<br />2006 22,158,991 30,579,449 8,420,458 72.5 9,301,960 90.5
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