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Shelby County, Tennessee
Notes to Financial Statements
June 30,2013
Fiscal
Annual
OPEB Costs
Actual
ofAOC
Year Ended
(AOCt
Contributions
Contributed
June 30,2013
$
32,983,377
Percentage
$
29,232,920
88.6%
Net OPEB
Obligation
$
17,701,150
June 30,2012
26,928,000
31,914,109
118.5%
13,950,693
June 30,2011
30,122,000
24,850,458
82.5%
18,936,802
June 30,2010
29,007,000
20,611,575
71.1%
13,665,260
June 30,2009
31,600,000
18329,123
58.0%
5,269,835
June 30,2008
34,227,000
42^28,042
123.4%
(8,001,042)
For government-wide and proprietary funds, the County reports OPEB expenses and net OPEB obligation using the
economic resources measurement focus and the accrual basis of accounting. In governmental funds, expenses are
reported at amounts paid or payable to the Trust in the current year.
Funded Status and Funding Progress:
As of July 1, 2012, the most recent actuarial valuation date, the plan was 25.7% funded. The actuarial accrued
liability for benefits was $411 million, and the actuarial value of assets was $105 million, resulting in an unfunded
actuarial accrued liability; (LTAAL) of $306 million. The covered payroll (annual payroll of active employees
covered by the plan) was $242 million and the ratio of the UAAL to the covered payroll was 126.4%.
Actuarial calculations of the OPEB plan reflect a long-term perspective. These calculations are based on the OPEB
benefits provided under the terms of the substantive plan in effect at the time of each valuation and on the pattern of
sharing of costs between the employer and plan members to that point. Actuarial valuations for OPEB plans
involve estimates of the value of reported amounts and assumptions about the probability of events far into the
future. These actuarially determined amounts are subject to continual revision as results are compared to past
expectations and new estimates are made about the future.
The schedule of funding progress, presented as required supplemental information (RSI) following the notes to the
financial statements, presents multiyear trend information about whether the actuarial value of plan assets is
increasing or decreasing over time relative to the actuarial accrued liability for benefits.
Actuarial Valuation, Method and Assumptions
Valuation date
June 30,2012
Actuarial cost method
Projected unit credit
Amortization method
Closed 30 year level dollar period beginning July 1*2007
Remaining amortization period
25 years as June 30,2012
Asset valuation method
Market value
Rate of inflation
4.00%
Rate of investment return
5.25%
Projected salary increases
4.00%
Healthcare cost trend rate
7.0% to 9.5% graded to 5.0% over 6 years
D-36
Shelby County, Tennessee
Shelby County Retirement System
Required Supplementary Information
For the Year Ended June 30,2008
Schnlnte of FnnfHira Piiiuivhh
Unfunded
Actuarial
Unfunded
Accrued
Actuarial
Actuarial
Liability/
Valuation
Accrued
(Surplus) as a
Date of
Actuarial Value or
Actuarial Accrued
Liability/
Funded
June 30
Assets
Liability
(Surplus)
Ratio
Percentage of
Covered Payroll
(76.252.183)
1106%
233,148.476
(32.7%)
2003
794,201,990
769.753,615
(24.448.375)
103.2%
237.197,193
(10.3%)
2004
841.335,004
737.329,388
(104,005.616)
114.1%
246,685,081
(42.2%)
2005
885.049,492
780.800.809
(104,248.683)
113.4%
253,031,826
(41.2%)
2006
933,730,481
860,178,582
(73,551.899)
108.6%
241,403,735
(30.5%)
2007
992,143^95
934,829.366
(57,314,029)
106.1%
251,059.875
(22.8%)
1,040,514,476
1.000,475,305
(40,039.171)
104 0%
264,640,554
(15.1%)
$
2002
2008
0I)
797,091,379
$
720,839,196
$
$
Covered Payroll
(a) See Note I V(O) in the Notes to Financial Statements for more information.
Other Post Employment Benefits (OPEB) Trust Fund
Required Supplementary Information
For the Year Ended June 30,2008
Schedule of Faodins Proems
Unlundcd
(amounts rounded to thousands)
Actuarial
Actuarial
Unfunded
Accrued
Actuarial
Liability/
(Surplus) as a
Accrued
Valuation
Date of
Actuarial Value of
Actuarial Accrued
Liability/
Funded
July 1
Assets
Liability
(Surplus)
Ratio
2007
*
$
319,685
$
319,685
0.0%
Percentage of
Covered Payroll
$
Covered Payroll
218,583
July 1.2007
Valuation date
Projected unit credit
Actuarial cost method
Amortization method
30 year period beginning July 1.2007
Remaining amortization period
30 years
10-year smoothing method
Asset valuation method
Actuarial assumptions
5.25%
Investmctn rate of return
2008 -10.5%; 2009 -10.0%; 2010 - 9.0%;
Healthcare cost trend rate
2011 - 8.0%; 2012 - 7.0%, 2013 - 6.0%
2014 and later - 5.0%
The notes to required supplementary information are an integral part of this schedule.
96
146.3%
NOTES TO FINANCIAL STATEMENTS
(Thousands of Dollars)
For the fiscal year ended June 30,2008
c
f
£ ^^
CITY OF MEMPHIS, TENNESSEE
(Continued)
payments to a qualified trust for the purpose of funding future OPEB benefits. In fiscal year 2008, the City
adopted and established an OPEB Trust for the exclusive purpose of pre-fiinding and providing for payment of
OPEB benefits under the plan. MLGW's Receipt of Medicare Part D prescription drug subsidies is included in
operating income.
Annual OPEB Cost. For fiscal 2008, the City contributed 64.5% or $35,743 of its annual OPEB cost of
$55,418. The annual OPEB cost consisted of the following:
Annual OPEB Cost (Expense)
Annual Required Contribution (ARC)
$ 55,418
Interest on beginning of year accrual
Amortization of beginning of year accrual
;
Fiscal 2008 OPEB cost
The Net OPEB Obligation was $19,675 at June 30,2008.
Funded Status and Funding Progress. The funded status of the plan as of July 1,2007, was as follows:
Actuarial accrued liability (AAL)
Actuarial value of plan assets
Unfunded actuarial accrued liability (UAAL)
Funded ratio (actuarial value of plan assets/AAL)
Covered payroll (active plan members)
UAAL as a percentage of covered payroll
$857,062
Q
$857062
0.00%
$283,789
302.0%
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions
about the probability of occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the
plan and the annual required contributions of the employer are subject to continual revision as actual results
are compared with past expectations and new estimates are made about the future. The schedule of funding
progress, presented as required supplementary information following the notes to the financial statements
(exhibit F-10), presents multiyear trend information that shows whether the actuarial value of plan assets is
increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on
the substantive plan (the plan as understood by the employer and plan members) and include the types of
benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between
the employer and plan members to that point. The actuarial methods and assumptions used include techniques
that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets,
consistent with the long-term perspective of the calculations.
In the July 1,2007 actuarial valuation, the entry age normal actuarial cost method was used. The actuarial
assumptions included a 5.5 percent investment rate of return (net of administrative expenses) and an annual
healthcare cost trend rate of 12 percent initially, reduced by decrements to an ultimate rate of 5 percent after ten
92
SCHEDULE OF FUNDING PROGRESS
OTHER POSTEMPLOYMENT BENEFITS (OPEB)
(Thousands of Dollars)
For the fiscal year ended June 30,2013
P
CITY OF MEMPHIS, TENNESSEE
Exhibit RSI-3
CITY OF MEMPHIS
UAAL as a
Actuarial
Unfunded/
Actuarial
Accrued
(Over-funded)
Value
Liability
AAL
Funded
Covered
Payroll1
Fiscal Year
of Assets
(AAL)
(UAAL)
Ratio
Payroll'
[(b)-(a)]*
Ending
(a)
(b)
(b)-(a)
(a)*(b)
<c)
(C)
June 30, 2011
$10,297
$1,345,355
$1,335,058
0.8%
$337,200
395.9%
June 30.2012
212.524
$1,267,515
$1,254,991
1.0%
$352,184
356.3%
June 30.2013
$22,616
$1,316,182
$1,293,566
1.7%
$327,738
394.7%
' Covered Payroll includes all active plan participants.
Source: The City of Memphis Actuary's Report for Retiree Health and Life Insurance Benefits
125
Percentage
of Covered
BOARD OF EDUCATION OF
SHELBY COUNTY, TENNESSEE
(A Component Unit of Shelby County, Tennessee)
Schedule of Funding Progress
Shelby County Board of Education Defined Benefit Plan
(dollar amounts in thousands)
For the Year Ended June 30,2011
Actuarial
Accrued
UAALasa
Actual
Valuation
Actuarial
Liability
Unfunded
Value of
(AAL)-Entry
AAL
Date
Plan Assets
$
June 30,2009
June 30,2007
$
(UAAL)
Age
110,442
103,860
$
125,169
$
111.892
$
$
14,727
8,032
Annual
Percentage
Funded
Covered
of Covered
Ratio
Payroll
Payroll
88.23 % $
92.82% $
47,330
31.12 %
38,818
20.69 %
The Governmental Accounting Standards Board (GASB) requires the plan to prepare the
Schedule of Funding Progress using the entry age actuarial cost method. The requirement to
present the Schedule of Funding Progress using the Entry Age actuarial cost method went into
effect during the year of the 2007 actuarial valuation, therefore only the two most recent
valuations are presented.
Schedule of Funding Progress
Other Post Employment Benefits Plan (OPEB)
For the Year Ended June 30,2011
Actuarial
Accrued
Actual
Value of
Liability
(AAL)
Projected
Valuation
Assets
Unit Credit
Date
(a)
(b)
Actuarial
June 30,2010
June 30,2009
June 30,2008
$
$
$
3,500,000
2.000.000
-
$337,515,237
$244,220,410
$787,583,902
UAALasa
Unfunded
(UAAL)
AAL
Percentage
Funded
Ratio
Covered
Payroll
of Covered
Payroll
$251,851,782
$245,061,956
$240,049,979
134.0%
99.6%
328.1%
(a/b)
$334,01537
$242,220,410
$787,583,902
0.16%
0.80%
0%
The Board began recognition of OPEB on July 1, 2007. Limited trend information may be
discerned from the three valuations made to date. The change in AAL for OPEB from the June
30,2008 to the June 30,2009 valuation date was due to actuarial assumptioa changes related to
reduction in claim costs for post-65 retirees. Effective January 1,2011, post-65 retirees formerly
covered under the self-insured plan will be covered under an insured Medicare Supplement plan
which is estimated to reduce claim cost by 63% to 72% depending on age. Additional reductions
are anticipated due to census changes, changes in retiree contributions, and any retirements or
terminations that did not occur as expected in the prior valuation.
■41-
F
NOTES TO THE BASIC FINANCIAL STATEMENTS
June 30,2011
BOARD OF EDUCATION OF THE
MEMPHIS CITY SCHOOLS
B. FUNDING POLICY
The obligations of the plan members, employers and other entities are established by action of the
School Board pursuant to applicable collective bargaining and employment agreements. The required
contribution rates of the employer and the members vary depending on the retiree's length of service
and whether singte or family coverage is elected. The School Board currently contributes enough
money to the plan to satisfy current obligations on a pay-as-you-go basis.
Memphis City Schools
funds on a cash basis as benefits are paid. The costs of administering the plan are paid by the School
Board. No assets have been segregated and restricted to provide postretirement benefits.
C. ACCOUNTING POLICY
The accrual basis of accounting is used.
The fair market value of assets, if any, is determined by the
market value of assets, if any, paid by a willing buyer to a willing seller.
D. ANNUAL OPEB COST AND NET OPEB OBLIGATION
The Memphis City Schools annual other post employment benefit (OPEB) cost (expense) is calculated
based on the annual required contribution of the employer (ARC). Memphis City Schools has engaged
an actuary to calculate the ARC and related iriibrrhatidn per the provisions of GASB 45 for employers in
plans with more than one hundred total plan members. The ARC represents a level of funding that, if
paid on an ongoing basis is projected to cover normal cost each year and to amortize any unfunded
actuarial liabilities (UAL) (or funding excess) over a period not to exceed thirty years. The following
table shows the components of Memphis City Schools' annual OPEB cost, the amount actually
contributed to the plan, and the School District's net OPEB obligation of the Retiree Health and Life
Plan at June, 30,2011, and the preceding two years:
Fiscal Year Ending June 30
2009
2010
2011
Annual OPEB Cost
84,073.207
77,845.562
43.374.552
54,239.929
48,722,422
4,073,237
5,532,525
5,062.719
ARC
Interest on net OPEB Obligation
105.904,174
143,845.661
131,630,703
12,183.976
7,743,745
3.848,828
Adjustment to ARC
(12,058,567)
(7.408.864)
(3.563.729)
Normal Cost at beginning of the year
$
58,456,385
Amortization of DAL
Interest
$
OPEB Expense
106,029,583
144,180,542
131.915,802
NET OPEB contributions made during the fiscal year
(36.323.662)
(35.508.186)
(34.542.876)
69.705,921
108,672.356
97,372,926
302.265,974
193,583,618
96.220.692
302,265.974
193.593.618
Increase in Net OPEB Obligation
Net OPEB Obligation, beginning of year
Net OPEB Obligation, end of year
$ 371.971,895
34.3%
Percentage of expense contributed
$
24.6%
26.2%
E. FUNDED STATUS AND FUNDING PROGRESS
As of June 30, 2011, the actuarial accrued liability for benefits was $1,169,082,486, all of which was
unfunded. The covered payroll (annual payroll of active employees covered by the plan) was
$630,864,202, and the ratio of the unfunded actuarial accrued liability to the covered payroll was
185.31%.
73

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