A report by J. Scott Magliari & Company for years ended Sept. 30, 2010 and 2009 showed that the Retirement Fund net assets dropped $15.5 million from $353,475,412 in 2009 to $337,990,950 in 2010.
It also found that the Fund’s investments market value decreased by $19.9 million or 6 percent in the last fiscal year from $332 million in 2009 to $312 million in 2010 despite a $24 million net investment income.
The audit found that the decline was due to the $40.85 million in drawdowns that the Fund had to make to cover for pension obligations.
The audit also cited a decrease in total deductions from $94,069,062 in 2009 to $85,033,892 last fiscal year.
The 9.6 percent decrease was due to lower provision for uncollectible contributions in 2010 which was offset by the increase in benefits payouts, the audit stated.
Moreover, the audit showed deterioration in funding level by comparing the ratio of net assets held in trust for pension benefits and the total actuarial present value of accrued liability. It was 44.8 percent funded as of Oct. 1, 2008 and slid further to 38.8 percent as of Oct. 1, 2009. For the auditor, the declining value of net assets and the increase in total actuarial present value of the accrued liability combined to pull the funding level downward.
This meant that the Fund had 39 cents available for every dollar of anticipated future liability.
The report also cited $59,365,592 and $60,057,174 in present value of non-vested benefits given that the actuarial present value in 2009 and 2008 were $911.19 million and $899.44 million respectively.
It could also be gleaned from the report that the Fund’s net assets available for the Defined Benefit Plan had seen a decline in the last three years, from 2008 to 2010. From $403.21 million in 2008, it went down to $353.48 million in FY ’09 and down to $337.99 million in FY’10.
Of these net assets, the Fund saw an increase in net receivables from employers from $42.27 million in FY ’08, 45.49 million in FY’09, to $48.25 million in FY’10.
There were no recorded refunds for the last fiscal year; however, the audit had in its books $1.088 million in payable refunds for 2009 and $62,689 in 2008.
Moreover, the total liabilities listed were $61.35 million in FY’08, $64.80 million in FY’09, and $65.43 million in FY’10.
Employer contributions continued to drop for three consecutive fiscal years: 49.34 million, ’08; $36.33 million, ’09; and $32.66 million,’10.
Among the reasons cited by the audit as culpable in the 10 percent decline of the contributions from 2009 to 2010 were delay in Legislature’s passage of the FY 2010 budget that resulted in shutdown of the non-essential operations of the government and employees resigning and pulling out their contributions.
For the same DB plan, employees’ contributions also saw a decrease for the three fiscal years from $9.4 million, $8.5 million and $8.39 million.
As for deductions, the Fund’s total deductions dropped from $94.48 million in 2009 to $87 million in 2010.
Of these deductions, there were $4.8 million refunds in 2009 and $3.36 million in 2010. The refunds in 2010 all came from the DB Plan.
For survival benefits, the Fund paid out $5.73 million in 2009 and $6.39 million last fiscal year.
A total of $1.7 million and $1.58 million in disability benefits were paid out in 2009 and 2010 respectively.
The Fund also paid $3.1 million and $6.3 million in health and life insurance premiums for the 2009 and 2010.
There were also death lump-sum deductions of $86,828 in 2010 and $62,291 in 2009.
It was also listed under deductions a total of $1.96 million withdrawals from the Defined Contribution Plan in 2010.
For FY’10, there were 4,434 individuals receiving benefits. Of this total, 2,841 were retirees; 1,439, beneficiaries, and 154 persons with disabilities.
There was also on record 143 terminated employees who had yet to receive benefits they were entitled to.
The audit report also showed a 1,664 increase in the number of members receiving benefits. For fiscal years 2009 and 2010, there were 2,152 and 2,841 retirees respectively with 525 and 1,439 beneficiaries. There were 689 more retirees last year compared to 2,152 in 2009.
The Fund also saw an increase in beneficiaries by 914 last year from 525 in 2009.
Although there were 69 more persons with disabilities receiving benefits in 2009, from 85 in 2009 to 154 in 2010, there were 151 terminated employees in 2009 versus 143 employees in 2010 entitled to benefits but had yet to receive them.
As of 2010, there were 3,078 active members to the Defined Benefit Plan with 2,852 Class I members and 226 Class II members.
In 2009, there were 3,204 and 229 Class I and Class II members respectively.
