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Home My WebLink About20201824.tiffr.MEW- Weld County Retirement Plan (Weld County) Governmental Accounting Standards Board Statement 68 (GASB 68) Actuarial Valuation As of December 31, 2019 This report has been prepared at the request of the Board to assist the sponsors of the Fund in preparing their financial report for their liabilities associated with the Plan. This valuation report may not otherwise be copied or reproduced in any form without the consent of the Board and may only be provided to other parties in its entirety. The measurements shown in this actuarial valuation may not be applicable for other purposes. Copyright © 2020 by The Segal Group, Inc. All rights reserved. (Lornrnoni CCt-Hng ocorcitao Segal rr-"_. C O cam,) C,Co i 1 90 Q�9Qsgay ly Sega June 18, 2020 Board Members Weld County Retirement Plan Greeley, CO 80632 Dear Board Members: 7951 East Maplewood Avenue Suite 317 Greenwood Village, CO 80111 segalco.com T 303.714.9900 We are pleased to submit this Governmental Accounting Standards Board Statement 68 (GASB 68) Actuarial Valuation based on a December 31, 2019 measurement date for employer reporting as of December 31, 2019. It contains various information that will need to be disclosed in order for Plan employers to comply with GASB 68. This report was prepared in accordance with generally accepted actuarial principles and practices at the request of the Board to assist the sponsors in preparing their financial report for their liabilities associated with the Plan. The census information on which our calculations were based was provided by Ms. Staci Datteri-Frey and draft financial information was provided by the County. That assistance is gratefully acknowledged. The measurements shown in this actuarial valuation may not be applicable for other purposes. Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions; and changes in plan provisions or applicable law. The actuarial calculations were completed under the supervision of Laura L. Mitchell, FCA, MAAA, EA, Enrolled Actuary. We are members of the American Academy of Actuaries and we meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion herein. To the best of our knowledge, the information supplied in the actuarial valuation is complete and accurate. Further, in our opinion, the assumptions as approved by the Board are reasonably related to the experience of and expectations for Plan. We look forward to reviewing this report with you and to answering any questions. Sincerely, Segal Brad Ramirez, FSA, MAAA, FCA, EA Laura L. Mitchell, FCA, MAAA, EA Vice President & Consulting Actuary Vice President & Consulting Actuary I Table of Contents Section 1: Actuarial Valuation Summary 4 Purpose and basis 4 Highlights of the valuation 4 Summary of key valuation results 6 Important information about actuarial valuations 7 Section 2: GASB 68 Information 9 General information about the pension plan 9 Net pension liability (asset) 11 Determination of discount rate and investment rates of return 12 Discount rate sensitivity 13 Schedule of changes in Net Pension Liability (Asset) — Last two fiscal years 14 Deferred outflows of resources and deferred inflows of resources 16 Schedule of recognition of change in total Net Pension Liability (Asset) 18 Pension expense 22 Schedule of reconciliation of Net Pension Liability (Asset) 23 Schedule of contributions — Last ten fiscal years 24 Schedule of Proportionate Share of the Net Pension Liability 26 Section 3: Actuarial Assumptions and Methods and Appendices 27 Exhibit I: Actuarial Assumptions and Actuarial Cost Method 27 Appendix A: Definition of Terms 31 Weld County Retirement Plan *Segal 3 I Actuarial Valuation Summary Purpose and basis This report has been prepared by Segal Consulting to present certain disclosure information required by Governmental Accounting Standards Board Statement 68 (GASB 68) for employer reporting as of December 31, 2019. The results used in preparing this GASB 68 report are comparable to those used in preparing the Governmental Accounting Standards Board Statement 67 (GASB 67) report for the plan based on a reporting date and a measurement date as of December 31, 2019. This valuation is based on: • The benefit provisions of Plan, as administered by the County; • The characteristics of covered active members, terminated vested members, and retired members and beneficiaries as of January 1, 2020, provided by the County; • The assets of the Plan as of December 31, 2019, provided by the County; • Economic assumptions regarding future salary increases and investment earnings adopted by the Board for the January 1, 2020 valuation; and • Other actuarial assumptions, regarding employee terminations, retirement, death, etc. adopted by the Board for the January 1, 2020 valuation. Highlights of the valuation 1. It is important to note that this actuarial valuation is based on plan assets as of December 31, 2019. Due to the COVID-19 pandemic, market conditions have changed significantly since the valuation date. 2. GASB 67 and 68 define pension liability and expense for financial reporting purposes only, and do not apply to contribution amounts for pension funding purposes. The County's contributions are set by statute and monitored using a systematic funding policy. Weld County Retirement Plan Segal 4 ISection 1: Actuarial Valuation Summary 3. When measuring pension liability GASB uses the same actuarial cost method (Entry Age method) and the same discount rate (expected return on assets) as Plan uses for funding. This means that the Total Pension Liability (TPL) measure for financial reporting shown in this report is determined on the same basis as Plan's Actuarial Accrued Liability (AAL) measure for funding 4. The Net Pension Liability (NPL) is equal to the difference between the TPL and the Plan Fiduciary Net Position. The Plan Fiduciary Net Position is equal to the market value of assets and therefore, the NPL measure is very similar to an Unfunded Actuarial Accrued Liability (UAAL) on a market value basis. The NPL was measured as of December 31, 2019 and December 31, 2018 and determined based upon the results of the actuarial valuations as of January 1, 2020 and January 1, 2019, respectively. The Plan's Fiduciary Net Position (plan assets) and the TPL were valued as of the measurement date. A Net Pension Asset occurs when the Plan Fiduciary Net Position exceeds the TPL. 5. The Net Pension Asset increased from $0.4 million as of December 31, 2018 to $26.3 million as of December 31, 2019 primarily as a result of favorable investment results during 2019 and contributions in excess of the Actuarially Determined Contribution (ADC), offset by assumption and plan changes. Changes in these values during the last two fiscal years ending December 31, 2018 and December 31, 2019 can be found in Section 2. 6. The discount rates used to measure the TPL and NPL as of December 31, 2019 and December 31, 2018 were 6.50% and 7.00%, respectively. Because the Plan is expected to be able to make all projected future benefit payments for current members, as described on page 12, the Plan is able to use the same rates as are used for funding purposes. In addition, there were Plan changes since the December 31, 2018 valuation and the financial impact of those changes has been reflected in the results for the December 31, 2019 valuation. Various other information that is required to be disclosed can be found throughout Section 2. 7. The pension expense calculated in accordance with GASB 68 totaled $18.3 million for the fiscal year ending December 31, 2019. Components of this expense can found in Section 2. Weld County Retirement Plan IT Segal 5 i Section 1: Actuarial Valuation Summary Summary of key valuation results Reporting/Measurement Date for Employer under GASB 68 Disclosure elements for • Service cost fiscal year: • Total Pension Liability • Plan Fiduciary Net Position • Net Pension Liability (Asset) • Pension expense Schedule of contributions • Actuarially determined contributions for fiscal year: • Actual contributions • Contribution deficiency / (excess) Demographic data for plan year: • Number of retired members and beneficiaries • Number of vested terminated members' • Number of active members Key assumptions as of: • Investment rate of return • Inflation rate • Projected salary increases2 December 31, 2019 $9,995,448 346, 766, 655 373, 041, 097 -26,274,442 18,290,655 $32,467 28, 929, 726 -28,897,259 688 268 1,486 6.50% 2.30% 3.0% — 8.0% December 31, 2018 $9,185,761 309, 372, 522 309, 750, 501 -377,979 13,141, 590 25,485,259 -25,485,259 648 255 1,448 7.00% 2.30% 3.0% - 8.0% 1 Includes terminated members entitled to a refund of contributions. 2 Includes inflation at 2.30%. Weld County Retirement Plan Segal 6 ISection 1: Actuarial Valuation Summary Important information about actuarial valuations In order to prepare a valuation, Segal relies on a number of input items. These include: Plan of benefits Plan provisions define the rules that will be used to determine benefit payments, and those rules, or the interpretation of them, may change over time. It is important to keep Segal informed with respect to plan provisions and administrative procedures, and to review the plan description in this report (as well as the plan summary included in our funding valuation report) to confirm that Segal has correctly interpreted the plan of benefits. Participant data An actuarial valuation for a plan is based on data provided to the actuary by the County. Segal does not audit such data for completeness or accuracy, other than reviewing it for obvious inconsistencies compared to prior data and other information that appears unreasonable. It is important for Segal to receive the best possible data and to be informed about any known incomplete or inaccurate data. Assets The valuation is based on the market value of assets as of the valuation date, as provided by the County. Actuarial assumptions In preparing an actuarial valuation, Segal projects the benefits to be paid to existing plan participants for the rest of their lives and the lives of their beneficiaries. This projection requires actuarial assumptions as to the probability of death, disability, withdrawal, and retirement of each participant for each year. In addition, the benefits projected to be paid for each of those events in each future year reflect actuarial assumptions as to salary increases and cost -of -living adjustments. The forecasted benefits are then discounted to a present value, typically based on an estimate of the rate of return that will be achieved on the plan's assets or, if there are no assets, a rate of return based on a yield or index rate for 20 -year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher (or equivalent quality on another rating scale). There is a reasonable range for each assumption used in the projection and the results may vary materially based on which assumptions are selected. It is important for any user of an actuarial valuation to understand this concept. Actuarial assumptions are periodically reviewed to ensure that future valuations reflect emerging plan experience. While future changes in actuarial assumptions may have a significant impact on the reported results,that does not mean that the previous assumptions were unreasonable. Weld County Retirement Plan Segal ISection 1: Actuarial Valuation Summary The user of Segal's actuarial valuation (or other actuarial calculations) should keep the following in mind: The valuation is prepared at the request of the Board to assist the sponsors of the Fund in preparing items related to the pension plan in their financial reports. Segal is not responsible for the use or misuse of its report, particularly by any other party. An actuarial valuation is a measurement of the plan's assets and liabilities at a specific date. Accordingly, except where otherwise noted, Segal did not perform an analysis of the potential range of future financial measures. The actual long-term cost of the plan will be determined by the actual benefits and expenses paid and the actual investment experience of the plan. If Plan is aware of any event or trend that was not considered in this valuation that may materially change the results of the valuation, Segal should be advised, so that we can evaluate it. Segal does not provide investment, legal, accounting, or tax advice. Segal's valuation is based on our understanding of applicable guidance in these areas and of the plan's provisions, but they may be subject to alternative interpretations. The Board should look to their other advisors for expertise in these areas. As Segal has no discretionary authority with respect to the management or assets of Plan, it is not a fiduciary in its capacity as actuaries and consultants with respect to Plan. Weld County Retirement Plan Segal 8 GASB 68 Information General information about the pension plan Plan Description Plan administration. The Weld County Retirement Plan (Plan) is a defined benefit pension plan administered by the Board of Trustees. It is a single -employer public employee retirement system that acts as an investment and administrative agent. The Weld County Retirement Plan provides pensions for most regular full-time employees of Weld County. The benefit provisions and all other requirements are established by the County. The County has the authority to establish and amend the benefit terms. Weld County issues a publicly available financial report that includes the applicable financial statements and supplementary information. Plan membership. At January 1, 2020, pension plan membership consisted of the following: Retired members or beneficiaries currently receiving benefits Vested terminated members entitled to but not yet receiving benefits' Active members 688 268 1,486 Total 2,442 Benefits provided. All full time employees are eligible to participate in the Plan. Benefits vest after completing five years of credited service. Vested employees may retire with a reduced benefit after age 55 with five years of Credited Service. Unreduced benefits are provided at age 65 (age 62 with 8 years of credited service for Tier 1). Full benefits are also available after age 55 when age plus credited service total at least 80 (75 for Tier 1) and with 30 years of credited service for Tier 2. The monthly benefit is determined as follows: Amount: Tier 1: 2.75% of Average Monthly Compensation times Credited Service, payable as a 10 year certain and life annuity. Tier 2: 2.0% of Average Monthly Compensation times Credited Service, payable as a life annuity. Tier 3: 1.9% of each year's Compensation is used to determine the number of Variable Benefit Units (VBUs) earned each year. The initial value of a VBU was $10.00 on January 1, 2010. The value of the VBU is adjusted every January 1 for actual market investment performance compared to a 5% assumed rate of return (i.e. 1.00 plus actual rate of return, divided by 1.05). Payable as a life annuity. 1 Includes terminated members entitled to a refund of contributions. Weld County Retirement Plan Segal 9 i Section 2: GASB 68 Information Weld County Retirement Plan Effective for the Plan Year beginning January 1, 2015, the annual adjustment was set to 1.0000, for Plan Years beginning January 1, 2016 and January 1, 2017, the market performance for a Plan Year was determined as of the valuation Date that precedes the first day of the Plan Year by one year and one day, and for Plan Years beginning on or after January 1, 2018, the annual market performance for a Plan Year is based on an average of the annual rate of investment returns for the previous five Plan Years determined as of the valuation date that precedes the first day of the Plan Year by one year and one day. Calendar Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 Minimum Benefit Maximum Benefit ' Only applies to Tiers 1 and 2 Annual Adjustment 0.9724 1.0619 1.0857 1.0229 1.0000 0.9390 1.0333 1.0286 1.0296 Variable Benefit Unit Value 9.724 10.326 11.211 11A68 11.468 10.768 11.127 11.445 11.783 $25 per year of Credited Service 82.5% of the 12 highest Consecutive months Compensation within the last 120 months. A full description of the report is provided in the Actuarial Valuation and Review as of January 1, 2020, dated June 15, 2020. Segal 10 Section 2: GASB 68 Information Net pension liability (asset) Reporting/Measurement Date for Employer under GASB 68 Components of the Net Pension Liability (Asset) Total Pension Liability Plan Fiduciary Net Position December 31, 2019 December 31, 2018 $346,766,655 373, 041, 097 $309,372,522 309, 750, 501 Net Pension Liability (Asset) Plan Fiduciary Net Position as a percentage of the Total Pension Liability -26,274,442 107.58% -377,979 100.12% The Net Pension Liability (NPL) for the plan was measured as of December 31, 2019 and 2018. Plan Fiduciary Net Position (plan assets) was valued as of the measurement dates and the Total Pension Liability (TPL) was determined from actuarial valuations as of January 1, 2020 and 2019, respectively. Actuarial assumptions. The TPL as of December 31, 2019 and 2018, measured by actuarial valuations as of January 1, 2020 and 2019, respectively, used the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return 2.30% 3.0% — 8.0%, varying by age 6.50%, net of pension plan investment expense, including inflation previously 7.00% Other assumptions See Section 3 for a complete description of all actuarial assumptions. These assumptions were developed in the analysis of actuarial experience study for the period January 1, 2011 through December 31, 2014. The actuarial assumptions used in the December 31, 2019 valuation were based on the results of an actuarial experience study for the period January 1, 2011 to December 31, 2014. We recommend this study be updated before the next valuation. Detailed information regarding all actuarial assumptions can be found in Section 3, Exhibit I. Weld County Retirement Plan 78.1r Segal 11 1 Section 2: GASB 68 Information Determination of discount rate and investment rates of return The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of inflation) are developed for each major asset class. These returns are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage, adding expected inflation and subtracting expected investment expenses and a risk margin. The target allocation (approved by the Board) and projected arithmetic real rates of return for each major asset class, after deducting inflation, but before investment expenses, used in the derivation of the long-term expected investment rate of return assumption are summarized in the following table: Asset Class Global developed equity Emerging markets equity Private equity Investment grade fixed income High yield fixed income Floating rate public debt Private credit Low volatility strategies Core private equity real estate Value -add private equity real estate Target Long -Term Expected Allocation Real Rate of Return 26.50% 1.50% 2.00% 20.00% 10.00% 5.00% 10.00% 10.00% 10.00% 5.00% 5.91% 8.18% 9.82% 0.30% 3.42% 3.36% 6.20% 2.28% 3.02% 5.32% Total 100.00% Discount rate. The discount rates used to measure the Total Pension Liability (TPL) were 6.50% and 7.00% as of December 31, 2019 and December 31, 2018, respectively. The projection of cash flows used to determine the discount rate assumed plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates not less than the rate of contributions of the member. The current employer contribution rate, as set by statute, is 10.75% of compensation. For this purpose, only employer contributions that are intended to fund benefits for current plan members and their beneficiaries are included. Projected employer contributions that are intended to fund the service costs for future plan members and their beneficiaries, as well as projected contributions from future plan members, are not included. Based on those assumptions, the Plan Fiduciary Net Position (FNP) was projected to be available to make all projected future benefit payments for current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the TPL as of both December 31, 2019 and December 31, 2018. Weld County Retirement Plan v� Segal 12 I Section 2: GASB 68 Information Discount rate sensitivity Sensitivity of the Net Pension Liability to changes in the discount rate. The following presents the Net Pension Liability (Asset) of the Plan as of December 31, 2019, calculated using the discount rate of 6.50%, as well as what the Plan's NPL would be if it were calculated using a discount rate that is 1 -percentage -point lower (5.50%) or 1 -percentage -point higher (7.50%) than the current rate. 1% Decrease (5.50%) Current Discount Rate (6.50%) 1% Increase (7.50%) Net Pension Liability (Asset) $13,266,654 -$26,274,442 -$59,170,412 Weld County Retirement Plan 4�SegaI 13 i Section 2: GASB 68 Information Schedule of changes in Net Pension Liability (Asset) — Last two fiscal years Reporting/Measurement Date for Employer under GASB 68 December 31, 2019 December 31, 2018 Total Pension Liability Service cost $9,995,448 $9,185,761 Interest Change of benefit terms Differences between expected and actual experience Changes of assumptions Benefit payments, including refunds of member contributions N et change in Total Pension Liability Total Pension Liability — beginning Total Pension Liability - ending P lan Fiduciary Net Position 21,670,650 20,803,759 5,458,860 2,970,620 16,873,067 -19,574,512 1,624,323 1,144,064 7,730,772 - 17,757,593 $37,394,133 309, 372, 522 $346,766,655 $22,731,086 286,641,436 $309,372,522 Contributions — employer Contributions — employee Net investment income Benefit payments, including refunds of member contributions $28,929,726 9,692,850 44,363,986 -19,574,512 $25,485,259 9,485,480 - 111373,724 - 17,757,593 Administrative expense Other N et change in Plan Fiduciary Net Position Plan Fiduciary Net Position - beginning Plan Fiduciary Net Position - ending -121,454 0 -114,182 $63,290,596 3091750, 501 $373,041,097 $5,725,240 304,025,261 $309,750,501 Net Pension Liability (Asset) — ending Plan Fiduciary Net Position as a percentage of the Total Pension Liability Covered payroll Plan Net Pension Liability (Asset) as percentage of covered payroll -$26,274,442 107.58% $93,741,053 -28.03% -.$377}912. 100.12% $86,947,708 -0.43% Weld County Retirement Plan Segal 14 I Section 2: GASB 68 Information Notes to Schedule: Benefit changes: Change of Assumptions: - Effective May 16, 2019, a member can attain his Normal Retirement Date under the Rule of 80 when he reaches age 55 and his service and age, when added together, equal 80 or more. - Effective after August 3, 2019, the member contributions were decreased to 9.0% of compensation. - Effective January 1, 2020, the Board adopted a one-time COLA increase of 1.0% to all retirees and beneficiaries of retirees in pay status as of January 1, 2020. The long term expected rate of return on assets and the discount rate used to measure TPL was decreased from 7.00% to 6.50% as of December 31, 2019. Weld County Retirement Plan Segal 15 I Section 2: GASB 68 Information Deferred outflows of resources and deferred inflows of resources Reporting/Measurement Date for Employer under GASB 68 Deferred Outflows of Resources Changes in proportion and differences between employer's contributions and proportionate share of contributions' December 31, 2019 December 31, 2018 $0 $0 Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments Difference between expected and actual experience in the Total Pension Liability Total Deferred Outflows of Resources Deferred Inflows of Resources 23, 818, 065 0 4,922,901 $28,740,966 14,704,644 23,593,711 4,171,397 $42,469,752 Changes in proportion and differences between employer's contributions and proportionate share of contributions4 $0 $0 Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments Difference between expected and actual experience in the Total Pension Liability Total Deferred Inflows of Resources 0 2,120,091 0 $2,120,091 591,485 0 0 $591,485 Deferred outflows of resources and deferred inflows of resources related to pension will be recognized as follows: Reporting Date for Employer under GASB 68 Year Ended December 31: 2019 2020 2021 2022 2023 Thereafter N/A $9,515,126 9,385,530 8,219,040 -498,821 0 $13,501,187 9,934,254 9,804,658 8,638,168 0 0 1 Calculated in accordance with Paragraphs 54 and 55 of GASB 68 Weld County Retirement Plan Segal 16 I Section 2: GASB 68 Information The average of the expected service lives of all employees used in the Schedule of Recognition of Changes in Total Net Pension Liability (Asset) is 4.98, and is determined by: • Calculating each active employee's expected remaining service life as the present value of $1 per year of future service at zero percent interest. • Setting the remaining service life to zero for each nonactive or retired member. • Dividing the sum of the above amounts by the total number of active employee, nonactive and retired members. Weld County Retirement Plan Segal 1 7 i Section 2: GASB 68 Information Schedule of recognition of change in total Net Pension Liability (Asset) Increase (Decrease) in Pension Expense Arising from the Recognition of the Effects of Differences between Expected and Actual Experience on Total Pension Liability Reporting Date for Employer under GASB 68 Year Ended December 31 2014 2015 2016 2017 2018 2019 Differences between Expected and Actual Experience -$187,789 1,228,914 2,332,354 3,489,870 1,144,064 2,970,620 Recognition Period (Years) 4.74 4.92 4.98 5.02 4.99 4.98 2018 -$29,317 249,779 468,344 695,193 229,271 N/A 2019 $0 229,798 468,344 695,193 229,271 596.510 2020 $0 0 458,978 695,193 229,271 596.510 2021 $0 0 0 695,193 229,271 596.510 2022 $0 0 0 13,905 226,980 596.510 Net increase (decrease) in pension expense N/A $2,219,116 $1,979,952 $1,520,974 $837,395 2023 $0 0 0 0 0 584, 580 $584,580 Thereafter $0 0 0 0 0 0 $0 Weld County Retirement Plan Segal 1$ ISection 2: GASB 68 Information Increase (Decrease) in Pension Expense Arising from the Recognition of the Effects of Assumption Changes Reporting Date for Employer under GASB 68 Year Ended December 31 2015 2016 Assumption Changes Recognition Period (Years) 2017 2018 2019 -$3,163,157 0 14,167,579 7,730,772 16.873,067 4.92 0.00 5.02 4.99 4.98 2018 -$642,918 0 2,822,227 1,549,253 Net increase (decrease) in pension expense 2019 -$591,485 0 2,822,227 1,549,253 N/A 3,388;166 N/A $7,168,161 2020 2021 2022 2023 Thereafter $0 0 0 0 $0 0 2,822,227 11549.253 3,388.166 $0 0 2,822,227 1,549,253 3,388,166 $0 0 56,444 1,533,760 3.388.166 $7,759,646 $7,759,646 $4,978,370 $0 0 0 0 3,320,403 $3,320,403 0 $0 As described in Exhibit of Deferred Outflows of Resources and Deferred Inflows of Resources, the average of the expected remaining service lives of all employees that are provided with pensions through Plan (active and inactive employees) determined as of December 31, 2018 (the beginning of the measurement period ending December 31, 2019) is 4.98 years. Weld County Retirement Plan Segal 19 i Section 2: GASB 68 Information Increase (Decrease) in Pension Expense Arising from the Recognition of the Effects of Differences between Projected and Actual Earnings on Pension Plan Investments Reporting Date for Employer under GASB 68 Year Ended December 31 2014 2015 2016 2017 2018 2019 Differences between Projected and Actual Earnings $601,503 19,596,261 -1,646,896 -11,491,833 34, 035, 393 -22,019,020 Recognition Period (Years) 2018 2019 2020 2021 2022 2023 5.00 5.00 5.00 5.00 5.00 $120,299 Net increase (decrease) in pension expense 3,919,252 -329,379 2.298, 367 6,807,077 5.00 N/A N/A $0 3,919,253 -329,379 -2,298,367 6,807,079 -4,403,804 $3,694,782 $0 $0 0 0 -329,380 0 -21298,367 -2,298,365 6,807,079 6,807,079 —4,403,804 —4,403,804 —$224,472 $104,910 $0 0 0 0 6,807,079 —4s403,804 $2,403,275 $0 0 0 0 0 —4,403,804 —$4,403,804 Thereafter $0 0 0 0 0 0 $0 Weld County Retirement Plan Segal 20 I Section 2: GASB 68 Information Total Increase (Decrease) in Pension Expense Reporting Date for Employer under GASB 68 Year Ended December 31 Total Increase (Decrease) in Pension Expense 2018 2014 2015 2016 2017 2018 2019 $413,714 17,662,018 685,458 6,165,616 42,910,229 -2,1751333 $90,982 3,526,113 138,965 1,219,053 8,585,601 N/A 2019 $0 3,557,566 138,965 1,219,053 8,585,603 -419,128 2020 2021 $0 0 129,598 2022 2023 Thereafter $0 $0 $0 0 0 0 0 0 0 Net increase (decrease) in pension expense N/A $13,082,059 1,219,053 1,219,055 70,349 0 8,585,603 8,585,603 8,567,819 0 -419,128 -419,128 -419,128 -498,821 $9,515,126 $9,3851530 $8,219,040 -$4981821 $0 0 0 0 0 0 $0 Weld County Retirement Plan Segal 21 ISection 2: GASB 68 Information Pension expense Reporting/Measurement Date for Employer under GASB 68 Components of Pension Expense Service cost Interest on the Total Pension Liability December 31, 2019 December 31, 2018 $9,995,448 21,670,650 $9,1851761 20, 803, 759 Expensed portion of current -period changes in proportion and differences between employer's contributions and proportionate share of contributions Current -period benefit changes Expensed portion of current -period difference between expected and actual experience in the Total Pension Liability Expensed portion of current -period changes of assumptions or other inputs Member contributions 5,458,860 596,510 1,624,323 229,271 Projected earnings on plan investments Expensed portion of current -period differences between actual and projected earnings on plan investments Administrative expense 3,3881166 -9,692,850 -22,344,966 -41403,804 1,549,253 -9,485,480 -22,661,669 6,807,077 121,454 114,182 Other ISO a a WO Recognition of beginning of year deferred outflows of resources as pension expense Recognition of beginning of year deferred inflows of resources as pension expense Net amortization of deferred amounts from changes in proportion and differences between employer's contributions and proportionate share of contributions Pension Expense 16,720,418 -3,219,231 8,275,094 -3,299,981 Ea a $18,290,655 $13,141,590 Weld County Retirement Plan Segal 22 I Section 2: GASB 68 Information Schedule of reconciliation of Net Pension Liability (Asset) Reporting/Measurement Date for Employer under GASB 68 Beginning Net Pension Liability (Asset) Pension expense Employer contributions New net deferred inflows/outflows December 31, 2019 -$377,979 18,290,655 -28,929,726 -1,756,205 December 31, 2018 -$17,383,825 13,141, 590 -25,485,259 34,324,628 Change in allocation of prior deferred inflows/outflows New net deferred inflows/outflows due to change in proportion Recognition of prior deferred inflows/outflows Recognition of prior deferred inflows/outflows due to change in proportion Ending Net Pension Liability (Asset) 0 0 -13,501,187 0 -$26,274,442 0 0 -4,975,113 0 -$377,979 Weld County Retirement Plan Segal 23 ISection 2: GASB 68 Information Schedule of contributions - Last ten fiscal years Year Ended December 31 2010 Actuarially Determined Contributions Contributions in Relation to the Actuarially Determined Contributions Contribution Deficiency/ (Excess) Covered Payroll Contributions as a Percentage of Covered Payroll 2011 2012 2013 2014 2015 2016 2017 $5,417,362 6,013,818 6,138.685 6,578,458 5,798,248 4,609,558 $4,885,660 4,906,758 6,970,039' 11,235,0091 17,186,9621 58,861,621' 8,323.335 24,868,792' $531,702 1,107, 060 -831,354 - 4,656,551 - 11,388,714 $53,484,492 53,415,982 55,871,701 55,833,201 9.13% 61,704,127 -54,252,063 - 8.323,335 - 24,868,792 68,958,839 75,222,493 80,020,609 9.19% 12.48% 20.12% 27.85% 85.36% 11.06% 31.08% 2018 25,485,259' -25,485,259 86,947,708 29.31 % 2019 32,467 28,929,7261 -28,897,259 93,741,053 30.86% See accompanying notes to this schedule on next page. 1 Includes contributions and reimbursement of prior years' expenditures. Weld County Retirement Plan Segal 24 I Section 2: GASB 68 Information Notes to Schedule: Methods and assumptions used to establish "actuarially determined contribution" rates: Actuarially determined contribution rates are calculated as of December 31, one year prior to the end of the fiscal year in which contributions are reported Actuarial cost method Entry Age Actuarial Cost Method Valuation date Amortization method Level percent of payroll Remaining amortization period Asset valuation method 30 -year closed amortization period to be set when the Plan next has an unfunded actuarial accrued liability. The amortization period will decline each year thereafter. The market value of assets less unrecognized returns in each of the last five years. Unrecognized return is equal to the difference between actual and expected returns on a market value basis and is recognized over a five-year period. The deferred return is further adjusted, if necessary, so that the actuarial value of assets will stay within 20% of the market value of assets. Actuarial assumptions: Investment rate of return Inflation rate Projected salary increases Cost of living adjustments Other assumptions 6.50%, net of pension plan investment expense, including inflation. 2.30% 3.0% — 8.0% None Same as those used in the January 1, 2020 funding actuarial valuation. Weld County Retirement Plan Segal 25 I r ISection 2: GASB 68 Information Schedule of Proportionate Share of the Net Pension Liability Reporting Date for Employer under GASB 68 as of December 31 Proportion of the Net Pension Liability (Asset) 2014 2015 2016 2017 2018 2019 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Proportionate Share of Net Pension Liability (Asset) $46,868,432 7,382,040 1,101,161 -17,383,825 -377,979 -26,274,442 Projected Covered Payroll Proportionate Share of the Net Pension Liability (Asset) as a Percentage of Its covered Payroll Plan Fiduciary Net Position as a Percentage of the Total Pension Liability $68,958,839 75,222,493 80,020,609 86,947,708 93,741,053 99,649,570 67.97% 9.81% 1.38% - 19.99% -0.40% - 26.37% 79.83% 96.95% 99.57% 106.06% 100.12% 107.58% 1 Covered payroll represents compensation earnable and pensionable compensation. Only compensation earnable and pensionable compensation that would possibly go into the determination of the retirement benefits are included. Weld County Retirement Plan 781T Segal 26 Actuarial Assumptions and Methods and Appendices Exhibit I: Actuarial Assumptions and Actuarial Cost Method Rationale for Demographic and Noneconomic Assumptions: The information and analysis used in selecting each assumption that has a significant effect on this actuarial valuation is shown in the Actuarial Experience Study for the period January 1, 2011 through December 31, 2014. We recommend updating this study before the next actuarial valuation. Assumption changes were made by the Board at their meeting on March 8, 2016 and again at the meetings on November 7, 2017, November 13, 2018 and November 5, 2019. Current data is reviewed in conjunction with each annual valuation. Assumption changes were made and are listed at the end of this exhibit. Mortality Rates: Annual Administrative Expenses: Pre -retirement: RP -2014 Blue Collar Employee Mortality Tables, set forward 5 years for males (no set forward for females) with generational projection using Scale MP 2015 from 2015. Post -retirement: RP -2014 Blue Collar Healthy Annuitant Mortality Tables, set forward 5 years for males (no set forward for females) with generational projection using Scale MP 2015 from 2015. The underlying tables set forward 5 years for males (no set forward for females) with the generational projection to the ages of participants as of the measurement date reasonably reflect the mortality experience of the Plan as of the measurement date. These mortality tables were then adjusted to future years using the generational projection to reflect future mortality improvement between the measurement date and those years. Disabled: RP -2014 Disabled Retiree Mortality Table Equal to the prior year expenses ($121,454 for the year beginning January 1, 2020). Increase in Compensation and Benefit Limit: 2.3% per year, rounded down to the nearest $5,000. Weld County Retirement Plan Segal 27 ISection 3: Actuarial Assumptions and Methods and Appendices Annuitant Mortality Rates: Rate (%)1 Age Healthy Male Female Disabled Male Female 55 0.85 0.40 2.34 1.45 60 1.26 0.57 2.66 1.70 65 1.97 0.87 3.17 2.09 70 3.15 1.40 4.03 2.82 75 5.19 2.30 5.43 4.10 80 8.68 3.82 7.66 6.10 85 14.64 6.50 11.33 9.04 90 22.67 11.19 17.30 13.27 Termination Rates before Retirement: 1 Mortality rates shown for base table with 5 years set forward for males Rate (%) Age Mortality' Male Female Disability Withdrawal2 Less than 5 years of service 5 or more years of service 20 0.06 0.02 0.03 17.99 14.19 30 0.07 0.02 0.06 18.61 13.58 40 0.13 0.04 0.11 15.91 6.01 50 0.36 0.12 0.30 15.60 5.32 60 1.07 0.27 0.81 13.63 2.12 70 2.79 0.70 0.00 N/A N/A 80 4.50 1.98 0.00 N/A N/A 1 Mortality rates shown for base table, with 5 years set forward for males. 2Withdrawal rates do not apply at or beyond early retirement age. Weld County Retirement Plan 44SegaI 28 ISection 3: Actuarial Assumptions and Methods and Appendices Retirement Rates: Employees Included: Unknown Data for Members: Age Retirement Probability Active Unreduced Tier 1 All Others 55 50% 5%1 56-57 15% 5% 58 - 59 15% 10% 60 30% 10% 61 10% 10% 62 - 64 10% 15% 65-69 40% 40% 70+ 100% 100% 150% for inactive vested participants Any elected or appointed County officer or deputy and all permanent, full-time employees, excluding employees of the Weld County Health Department, are eligible for membership on their date of employment, election or appointment. All employees hired after January 1, 1969 are required to participate. Same as those exhibited by members with similar known characteristics. If not specified, members are assumed to be male. Percent Married: Age of Spouse: Net Investment Return: Employee Contribution Crediting Rate: 85% Females three years younger than males 6.50%, net of investment expenses 3.00% per annum Weld County Retirement Plan Sega I 29 ' t • _ y • •/ it .k„r' r w s. n ♦ tr.. L... ✓.. fr- Ors .r , re -) ari �� i r -- :I.- r, c. # r !: r' �i.`it,_.d Section 3: Actuarial Assumptions and Methods and Appendices Salary Increases: Age 20-24 25 — 29 30-34 35-39 40 — 49 50 — 64 65 - 70 Rate (%O 8.0% 7.0% 6.5% 6.0% 5.0% 4.0% 3.0% Benefit Election: • In all Tiers, 40% of participants terminating from active service without being eligible for immediate retirement benefits are assumed to elect the refund of contributions. • For Tier 1, 75% of males and 25% of females are assumed to elect the 100% joint and survivor form of payment, and 25% of males and 75% of females are assumed to elect the ten year certain and life form of payment. • For Tiers 2 and 3, 75% of males and 25% of females are assumed to elect the 100% joint and survivor form of payment, and 25% of males and 75% females are assumed to elect the single life form of payment. • Death benefits are assumed to be paid in the form of an annuity; none are assumed to elect a refund of contributions. Actuarial Cost Method: Entry Age Actuarial Cost Method. Entry Age is the age at date of employment. Normal Cost and Actuarial Accrued Liability are calculated on an individual basis and are allocated by salary, with Normal Cost determined using the plan of benefits applicable to each participant. Expected Remaining Service Lives: The average of the expected service lives of all employees is determined by: • Calculating each active employee's expected remaining service life as the present value of $1 per year of future service at zero percent interest. • Setting the remaining service life to zero for each nonactive or retired member. • Dividing the sum of the above amounts by the total number of active employee, nonactive, and retired members. Justification for Change in Based on past experience and future expectations, the Board changed the following actuarial assumption effective Actuarial Assumptions: December 31, 2019: • Net investment return, previously 7.00% Weld County Retirement Plan A- SegaI 30 ISection 3: Actuarial Assumptions and Methods and Appendices Appendix A: Definition of Terms Definitions of certain terms as they are used in Statement 68. The terms may have different meanings in other contexts. Active Employees: Actual Contributions: Actuarial Present Value of Projected Benefit Payments: Actuarial Valuation: Individuals employed at the end of the reporting or measurement period, as applicable. Cash contributions recognized as additions to a pension Plan Fiduciary Net Position. Projected benefit payments discounted to reflect the expected effects of the time value (present value) of money and the probabilities of payment. The determination, as of a point in time (the actuarial valuation date), of the service cost, Total Pension Liability, and related actuarial present value of projected benefit payments for pensions performed in conformity with Actuarial Standards of Practice unless otherwise specified by the GASB. Actuarial Valuation Date: The date as of which an actuarial valuation is performed. Actuarially Determined Contribution: A target or recommended contribution to a defined benefit pension plan for the reporting period, determined in conformity with Actuarial Standards of Practice based on the most recent measurement available when the contribution for the reporting period was adopted. Ad Hoc Cost -of -Living Adjustments (Ad Hoc COLAs): Cost -of -living adjustments that require a decision to grant by the authority responsible for making such decisions. Ad Hoc Postemployment Benefit Changes: Agent Employer: Agent Multiple -Employer Defined Benefit Pension Plan (Agent Pension Plan): Allocated Insurance Contract: Automatic Cost -of -Living Adjustments (Automatic COLAs): Postemployment benefit changes that require a decision to grant by the authority responsible for making such decisions. An employer whose employees are provided with pensions through an agent multiple - employer defined benefit pension plan. A multiple -employer defined benefit pension plan in which pension plan assets are pooled for investment purposes but separate accounts are maintained for each individual employer so that each employer's share of the pooled assets is legally available to pay the benefits of only its employees. A contract with an insurance company under which related payments to the insurance company are currently used to purchase immediate or deferred annuities for individual employees. Also may be referred to as an annuity contract. Cost -of -living adjustments that occur without a requirement for a decision to grant by a responsible authority, including those for which the amounts are determined by reference to a specified experience factor (such as the earnings experience of the pension plan) or to another variable (such as an increase in the consumer price index). Automatic Postemployment Benefit Changes: Weld County Retirement Plan Postemployment benefit changes that occur without a requirement for a decision to grant by a responsible authority, including those for which the amounts are determined by reference to *Segal 31 r �`- ISection 3: Actuarial Assumptions and Methods and Appendices Closed Period: Collective Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions: a specified experience factor (such as the earnings experience of the pension plan) or to another variable (such as an increase in the consumer price index). A specific number of years that is counted from one date and declines to zero with the passage of time. For example, if the recognition period initially is five years on a closed basis, four years remain after the first year, three years after the second year, and so forth. Deferred outflows of resources and deferred inflows of resources related to pensions arising from certain changes in the collective Net Pension Liability. Collective Net Pension Liability: The Net Pension Liability for benefits provided through (1) a cost -sharing pension plan or (2) a single -employer or agent pension plan in circumstances in which there is a special funding situation. Collective Pension Expense: Contributions: Cost -of -Living Adjustments: Pension expense arising from certain changes in the collective Net Pension Liability. Additions to a pension Plan Fiduciary Net Position for amounts from employers, non - employer contributing entities (for example, state government contributions to a local government pension plan), or employees. Contributions can result from cash receipts by the pension plan or from recognition by the pension plan of a receivable from one of these sources. Postemployment benefit changes intended to adjust benefit payments for the effects of inflation. Cost -Sharing Employer: Cost -Sharing Multiple -Employer Defined Benefit Pension Plan (Cost -Sharing Pension Plan): Covered Payroll: Deferred Retirement Option Program (DROP): An employer whose employees are provided with pensions through a cost -sharing multiple - employer defined benefit pension plan. A multiple -employer defined benefit pension plan in which the pension obligations to the employees of more than one employer are pooled and pension plan assets can be used to pay the benefits of the employees of any employer that provides pensions through the pension plan. The payroll of employees that are provided with pensions through the pension plan. A program that permits an employee to elect a calculation of benefit payments based on service credits and salary, as applicable, as of the DROP entry date. The employee continues to provide service to the employer and is paid for that service by the employer after the DROP entry date; however, the pensions that would have been paid to the employee (if the employee had retired and not entered the DROP) are credited to an individual employee account within the defined benefit pension plan until the end of the DROP period. Weld County Retirement Plan *Segal 32 ISection 3: Actuarial Assumptions and Methods and Appendices Defined Benefit Pension Plans: Defined Benefit Pensions: Pension plans that are used to provide defined benefit pensions. Defined Contribution Pension Plans: Defined Contribution Pensions: Discount Rate: Pensions for which the income or other benefits that the employee will receive at or after separation from employment are defined by the benefit terms. The pensions may be stated as a specified dollar amount or as an amount that is calculated based on one or more factors such as age, years of service, and compensation. (A pension that does not meet the criteria of a defined contribution pension is classified as a defined benefit pension for purposes of Statement 68.) Pension plans that are used to provide defined contribution pensions. Pensions having terms that (1) provide an individual account for each employee; (2) define the contributions that an employer is required to make (or the credits that it is required to provide) to an active employee's account for periods in which that employee renders service; and (3) provide that the pensions an employee will receive will depend only on the contributions (or credits) to the employee's account, actual earnings on investments of those contributions (or credits), and the effects of forfeitures of contributions (or credits) made for other employees, as well as pension plan administrative costs, that are allocated to the employee's account. Entry Age Actuarial Cost Method: Inactive Employees: The single rate of return that, when applied to all projected benefit payments, results in an actuarial present value of projected benefit payments equal to the total of the following: 1. The actuarial present value of benefit payments projected to be made in future periods in which (a) the amount of the pension Plan Fiduciary Net Position is projected (under the requirements of Statement 68) to be greater than the benefit payments that are projected to be made in that period and (b) pension plan assets up to that point are expected to be invested using a strategy to achieve the long-term expected rate of return, calculated using the long-term expected rate of return on pension plan investments. 2. The actuarial present value of projected benefit payments not included in (1), calculated using the municipal bond rate. A method under which the actuarial present value of the projected benefits of each individual included in an actuarial valuation is allocated on a level basis over the earnings or service of the individual between entry age and assumed exit age(s). The portion of this actuarial present value allocated to a valuation year is called the normal cost. The portion of this actuarial present value not provided for at a valuation date by the actuarial present value of future normal costs is called the actuarial accrued liability. Measurement Period: Terminated individuals that have accumulated benefits but are not yet receiving them, and retirees or their beneficiaries currently receiving benefits. The period between the prior and the current measurement dates. Multiple -Employer Defined Benefit Pension Plan: A defined benefit pension plan that is used to provide pensions to the employees of more than one employer. Weld County Retirement Plan IT Segal 33 ISection 3: Actuarial Assumptions and Methods and Appendices N et Pension Liability (NPL): N on -Employer Contributing Entities: Other Postemployment Benefits: The liability of employers and non -employer contributing entities to employees for benefits provided through a defined benefit pension plan. Entities that make contributions to a pension plan that is used to provide pensions to the e mployees of other entities. For purposes of Statement 68, employees are not considered n on -employer contributing entities. All postemployment benefits other than retirement income (such as death benefits, life insurance, disability, and long-term care) that are provided separately from a pension plan, as well as postemployment healthcare benefits, regardless of the manner in which they are provided. Other postemployment benefits do not include termination benefits. Pension Plans: Arrangements through which pensions are determined, assets dedicated for pensions are accumulated and managed and benefits are paid as they come due. Pensions: Plan Members: Postemployment Postemployment Benefit Changes: Postemployment Healthcare Benefits: Retirement income and, if provided through a pension plan, postemployment benefits other than retirement income (such as death benefits, life insurance, and disability benefits). Pensions do not include postemployment healthcare benefits and termination benefits. Individuals that are covered under the terms of a pension plan. Plan members generally include (1) employees in active service (active plan members) and (2) terminated employees who have accumulated benefits but are not yet receiving them and retirees or their beneficiaries currently receiving benefits (inactive plan members). The period after employment. Adjustments to the pension of an inactive employee. Medical, dental, vision, and other health -related benefits paid subsequent to the termination of employment. P rojected Benefit Payments: P ublic Employee Retirement System: Real Rate of Return: Service Costs: S ingle Employer: All benefits estimated to be payable through the pension plan to current active and inactive employees as a result of their past service and their expected future service. A special-purpose government that administers one or more pension plans; also may administer other types of employee benefit plans, including postemployment healthcare plans and deferred compensation plans. The rate of return on an investment after adjustment to eliminate inflation. The portions of the actuarial present value of projected benefit payments that are attributed to valuation years. An employer whose employees are provided with pensions through a single -employer defined benefit pension plan. Weld County Retirement Plan Segal 34 ISection 3: Actuarial Assumptions and Methods and Appendices Single -Employer Defined Benefit Pension Plan A defined benefit pension plan that is used to provide pensions to employees of only one (Single -Employer Pension Plan) employer. Special Funding Situations: Termination Benefits: Total Pension Liability (TPL): The portion of the actuarial present value of projected benefit payments that is attributed to past periods of employee service in conformity with the requirements of Statement 68. 5642841v4/13531 001 Circumstances in which a non -employer entity is legally responsible for making contributions directly to a pension plan that is used to provide pensions to the employees of another entity or entities and either of the following conditions exists: 1. The amount of contributions for which the non -employer entity legally is responsible is not dependent upon one or more events or circumstances unrelated to the pensions. 2. The non -employer entity is the only entity with a legal obligation to make contributions directly to a pension plan. Inducements offered by employers to active employees to hasten the termination of services, or payments made in consequence of the early termination of services. Termination benefits include early -retirement incentives, severance benefits, and other termination -related benefits Weld County Retirement Plan Sega I 35 Hello