Every two years the board updates its actuarial valuation, which determines future retirement liability, the balance of assets to meet that liability, and the amount we are funded/unfunded. The process also presents the board with an opportunity to revise the funding schedule to cover the difference.
Over the years, the board has leveraged investment gains to ease the burden on assessments to the units (towns, districts, agencies) – or mitigate losses – using variable assumptions such as: the percentage return on investments, the number of years to extend the funding schedule, the percentage increase to employee (for all units) payroll each year, and the rate at which assessments go up each year (amortization). This year the board used those factors to lessen the impact of the 2008/2009 recession – and kept the FY2012 assessment figure the same as the previous funding schedule by:
- lowering the investment rate to 7.875% from 8%
- lowering the payroll increase from 4.75% to 4.25%
- extending the funding schedule from 2026 to 2030
- and increasing the amortization rate from 2.38% to 4.26%
Also, the board was able to include an increase of the retirees COLA base, from $12,000 to $13,000 – something that hasn’t been done since 1997. All this is possible because the retirement system is financially healthy. – Dale
Click the link below to see the new funding schedule: