ACTUARIAL VALUATION REPORT · Summary of Plan Membership . Valuation Date 1/1/2019 1/1/2017 Participants Active 22 21 Retired 26 26 Disabled 1 1 Survivor 10 7 Deferred 2 2 Total 61

One Gateway Center / Suite 1475 / 420 Fort Duquesne Boulevard / Pittsburgh, PA / 15222 412.394.9660 / 1.800.405.3620 / Fax: 412.394.6339

ACTUARIAL VALUATION REPORT

for the

CITY OF BUTLER POLICE PENSION PLAN

as of January 1, 2019

Table of Contents

PAGE SECTION 1 - Valuation Overview ................................................................................................. 1

SECTION 2 - Certification ............................................................................................................. 5

SECTION 3 - Summary of Plan Provisions ................................................................................... 6

SECTION 4 - Development of Contribution Requirements

Normal Cost and Plan Funded Status ......................................................................................... 8

Analysis of Change in the Plan's Funded Status ......................................................................... 9

Amortization of Unfunded Actuarial Accrued Liability ........................................................... 10

Required Municipal Contributions ........................................................................................... 11

SECTION 5 - Risk Measurements ................................................................................................ 12

SECTION 6 - Actuarial Basis of Valuation

Actuarial Assumptions .............................................................................................................. 14

Actuarial Cost Method .............................................................................................................. 16

Actuarial Value of Assets ......................................................................................................... 17

SECTION 7 - Glossary ................................................................................................................. 19

CENSUS DATA ........................................................................................................................... 22

CITY OF BUTLER POLICE PENSION PLAN Mockenhaupt Benefits Group - Actuarial Valuation as of 01/01/2019

1

SECTION 1 Valuation Overview

At the request of the City of Butler, we have completed an actuarial valuation report (AVR)

for the City of Butler Police Pension Plan as of January 1, 2019. This valuation was prepared in

order to satisfy the funding and disclosure requirements of Act 205 of 1984. It also contains the

cost components which may be used in computing the Plan’s Minimum Municipal Obligation

(MMO). The funded status measures in this AVR are not intended to be appropriate for assessing

the sufficiency of plan assets to cover the estimated cost of settling the plan's benefit obligations.

The AVR should be used for no other purpose than those outlined herein.

Future actuarial measurements may differ significantly from the current measurements

presented in this report due to factors such as the following: plan experience differing from that

anticipated by the economic or demographic assumptions; changes in economic or demographic

assumptions; increases or decreases expected as part of the natural operation of the methodology

used for these measurements such as the end of an amortization period; and changes in plan

provisions or applicable law.

Summary of Plan Membership

Valuation Date 1/1/2019 1/1/2017

Participants Active 22 21

Retired 26 26 Disabled 1 1 Survivor 10 7 Deferred 2 2

Total 61 57 Active Participant Averages

Hire Age 29.1 28.1 Attained Age 36.7 39.1

Assumed Future Service 17 13 Monthly Compensation $4,681 $4,951

Employee Contributions

Total $421,721 $534,608


2

SECTION 1 Valuation Overview – (Continued)

Benefit Changes

There was a retirement window open during 2018 under which officers who had completed

at least 25 years of service could retire and receive their full retirement benefit immediately. One

officer retired under the window. In addition, the retirement age was changed from the later of

age 50 and completion of 20 years of service to the later of age 50 and completion of 25 years of

service for officers hired on or after October 1, 2018. The net effect of these two benefit changes

was an increase of $233,802 in the Actuarial Accrued Liability as of January 1, 2019.

Assumption Changes

There were no changes in the actuarial assumptions from the January 1, 2017 AVR.

Experience Gain/Loss

There was a net experience loss of $586,436 since the January 1, 2017 AVR. The primary

source of loss was return on the actuarial value of assets that was less than the assumed 7.25%

annual rate. Also contributing to the loss were contributions that were less than actuarially needed.

A contribution loss occurs due to the advance budgeting process under Act 205 when costs increase

significantly from one valuation to the next and recognition of the increase is delayed, when MMO

payrolls are less than valuation payrolls or contributions are made later than the beginning of the

year. Partially offsetting the investment and contribution losses was a gain from higher than

assumed employee turnover.

Cost Components (for MMO)

Valuation Date

Normal Cost % of Payroll

Admin. Expense % of Payroll

Amortization Payment / (Funding Adjustment)

1/1/2019 17.041% 5.200% $115,568

1/1/2017 16.573% 4.700% $27,191

Change 0.468% 0.500% $88,377


3


The normal cost as a percentage of payroll increased because the difference between base

pay, upon which pension benefits are based, and total pay, the basis for state reporting purposes,

decreased. Expenses as a percent of payroll increased primarily due to a lower annualized payroll.

The annual required amortization payment increased due to the experience loss and benefit change

described previously. MMOs based on this AVR will be significantly greater than if based on the

prior AVR.

Funded Status

The following charts show the actuarial accrued liability (AAL), the actuarial value of

assets (AVA) and the funded ratio, the AVA divided by the AAL. While the Act 205 funding

requirements are designed to bring this ratio eventually to 100%, through amortization payments

and the application of the funding adjustment credit when the funded ratio is above 100%, the

change in funding from valuation to valuation will not generally be steady because of normally

expected fluctuations due to experience gains and losses, benefit changes, or assumption changes.

Funded Year Ratio 2019 92.6% 2017 98.2% 2015 102.8% 2013 98.8% 2011 103.0% 2009 103.0% 2007 120.6%

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

2007 2009 2011 2013 2015 2017 2019

Historical Information: Actuarial Accrued Liability (AAL) and Actuarial Value of Assets

(AVA)

AAL AVA


4


Asset Smoothing

It is worth noting that if the market value of assets were used as the AVA instead of asset

smoothing, annual costs based on this valuation would be approximately $39,000 higher and the

funded ratio would be 90.0%.


5

SECTION 2 Certification

This actuarial valuation report is based upon participant data as of January 1, 2019

furnished to us by the City and upon asset information as of December 31, 2018 as provided by

PNC Institutional Asset Management and TD Ameritrade. The data has been reviewed and

determined to be reasonable and consistent. An audit of the data was beyond the scope of the

assignment. The completeness and accuracy of the valuation results are dependent upon the

completeness and accuracy of the data. This report has been completed in accordance with

generally accepted actuarial principles and practices, and reflects our current understanding of

applicable laws and regulatory requirements.

In the actuary’s opinion, the actuarial assumptions used in the valuation are reasonably

related to the experience of the Plan and to reasonable expectations, and they represent his best

estimate of anticipated experience under the Plan. To the best of our knowledge, the report is

complete and accurate, based on the data outlined herein. We will be happy to answer any

questions concerning this report and provide further information as needed.

MOCKENHAUPT BENEFITS GROUP

I, David Stimpson, am a member of the American Academy of Actuaries and I meet the

Qualification Standards of the American Academy of Actuaries to render the actuarial opinion

contained herein.

Certified by:

_________________________________________________ David H. Stimpson, E.A., F.C.A., M.A.A.A. Executive Vice President


6

SECTION 3 Summary of Plan Provisions

The Summary of Plan Provisions below is included to clarify the basis of our actuarial valuation and is not meant to govern the operation of the Plan. The summary represents our understanding of the benefits provided by the Plan, based upon documentation provided by the Plan Sponsor and our understanding of the way in which the Plan Sponsor operates the Plan. Capitalized terms are explained at the end of this summary. Effective Dates Plan Established - January 1, 1948 Most Recent Benefit Change - October 1, 2018 Participation City police officers begin participation in the plan on their full-time hire date. Employee Contributions Participants will contribute 5.0% of their wages plus $5 per month. The $5 per month will cease upon the attainment of age 65. Effective January 1, 1988, employee contributions are made on a pre-tax basis in accordance with Internal Revenue Code Section 414(h)(2). Normal Retirement Eligibility - Hired Before October 1, 2018: Age 50 and completion of 20 Years of Credited Service. Hired After October 1, 2018: Age 50 and completion of 25 Years of Credited Service. Benefit - A monthly benefit equal to 50% of Average Compensation, plus Service Increment if any. Window Retirement Participants who retired during 2018 were permitted to retire after 25 years of service, regardless of age. The window benefit was a monthly benefit equal to the Normal Retirement Benefit. Disability Retirement Eligibility - Total and permanent disablement that occurs while performing the duties of a police officer for the City of Butler; or if non-service related, total and permanent disablement that occurs following the completion of 15 Years of Credited Service. Benefit - Normal Retirement Benefit calculated at date of disablement.


7

SECTION 3 Summary of Plan Provisions – (Continued)

Death Benefits Before Retirement Eligibility - Refund of Employee Contributions. After Retirement Eligibility, Disability Retirement or for Killed in Service: A monthly benefit equal to 100% of the pension the participant was receiving or as calculated on the day of the participant's death. Payment of Benefits - Monthly death benefits are payable to the participant's spouse until death. In the event of the spouse’s death, each of the participant's dependent children will receive an equal share of the benefit until their 18th birthday. Termination of Employment /Vesting Vesting Schedule - 100% after 12 Years of Credited Service. Benefit – Non-vested participants receive a Refund of Employee Contributions. Vested participants may elect to receive a monthly benefit equal to the Normal Retirement benefit, calculated using pay at termination, multiplied by the ratio of Years of Credited Service to projected Years of Credited Service through Normal Retirement Date, in lieu of a Refund of Employee Contributions. The benefit is payable at Normal Retirement Date. Principal Definitions

Average Compensation: Monthly Pay averaged over any 5 continuous years or the monthly rate of pay at the time of termination, whichever produces the highest average.

Benefit Commencement Date: First day of the month coincident with or next following eligibility for and election to retire.

Monthly Pay: Base pay, longevity pay, and shift differential.

Normal Form of Payment: A monthly pension benefit payable for life.

Refund of Employee Contributions: Accumulated contributions without interest.

Service Increment: An additional monthly benefit of 1/40 of the Normal Retirement Benefit for each completed year of Service in excess of that required for normal retirement (20 if hired before October 1, 2018; 25 if hired after October 1, 2018), up to a maximum increment of $500 per month. Service after age 65 is not included.

Years of Credited Service: Continuous employment calculated in completed years only from date of hire through date of retirement or other severance. Any non-intervening military service time, up to 3 years, that has been purchased in accordance with the terms of the Plan will be included.


8

SECTION 4 Development of Contribution Requirements Normal Cost and Plan Funded Status

A. Normal Cost 2019 1. Retirement Benefits $202,689 2. Disability Benefits 34,516 3. Refunds to Withdrawals 3,537 4. Preretirement Death Benefits 2,199 5. Vested Benefits 3,936 Total $246,877

B. Actuarial Accrued Liability 1. Actuarial Present Value of Future Benefits: Deferred In Payment Active All Retirement Benefits $686,172 $9,309,311 $5,041,055 $15,036,538 Disability Benefits 0 116,911 452,821 569,732 Survivor Benefits 0 802,750 0 802,750 Refunds to Withdrawals 0 0 30,103 30,103 Preretirement Death Benefits 0 0 39,687 39,687 Vested Benefits 0 0 55,443 55,443 Total $686,172 $10,228,972 $5,619,109 $16,534,253

2. Actuarial Present Value of Future Normal Costs: (2,477,437) 3. Actuarial Accrued Liability $14,056,816

C. Unfunded Actuarial Accrued Liability 1. Actuarial Accrued Liability $14,056,816 2. Actuarial Value of Assets (13,020,592) 3. Unfunded Actuarial Accrued Liability $1,036,224* 4. Funded Ratio 92.6%* * The unfunded actuarial accrued liability based on the market value of assets is $1,410,480 and the funded ratio based on the market value of assets is 90.0%


9

SECTION 4 Development of Contribution Requirements Analysis of Change in the Plan's Funded Status

A. Reconciliation of Funded Status 1. Unfunded Actuarial Accrued Liability as of 01/01/17 $240,316 2017 2018 2. Normal Cost Assumed $251,872 $263,206 515,078 3. Assumed Administrative Expense 71,431 74,645 146,076 4. Interest Charged at Valuation Rate 109,181 5. Contributions 2017 2018 a. Municipality $0 $0 b. State Aid Allocated 199,136 199,639 c. Employees 64,153 82,174 (545,102) 6. Interest Credited at Valuation Rate (31,760) 7. Expected Unfunded Actuarial Accrued Liability Before Adjustments $433,789 8. Change in Unfunded Actuarial Accrued Liability due to a. Experience Loss (Gain) from Investment Return $543,382 from all other Sources (174,749) 368,633 b. Changes in Actuarial Assumptions 0 c. Benefit Modifications for Retireds 0 d. Benefit Modifications for Actives 233,802 e. Benefit Modifications for Retireds State Mandated 0 f. Benefit Modifications for Actives State Mandated 0 9. Actual Unfunded Actuarial Accrued Liability as of 01/01/19 $1,036,224

B. Loss (Gain) to be Amortized 1. Experience Loss (Gain) $368,633 2. Actuarially Required Contributions with Interest $794,665 3. Actual Contributions with Interest (576,862) 4. Contribution Loss (Gain) 217,803 5. Loss (Gain) to be Amortized $586,436


10

SECTION 4 Development of Contribution Requirements Amortization of Unfunded Actuarial Accrued Liability as of January 1, 2019

Original Year Target Remaining Remaining Annual Source Amount Est. Year Balance Payments Amount

Initial $0 0 0 $0 0 $0

Assumption Change $240,316 2017 2029 $215,986 11 $27,191

Aggregate Change through Last Valuation N/A N/A 2029 $215,986 11 $27,191

Assumption Change N/A Ben. Mod. - Actives $233,802 2019 2028 $233,802 10 $31,398 Ben. Mod. - Retireds N/A Ben. Mod. - Actives State Mandated N/A Ben. Mod. - Retireds State Mandated N/A Experience Loss $586,436 2019 2035 $586,436 17 $56,979

Aggregate Changes 2019 N/A N/A 2033 $820,238 15 $88,377

Aggregate Changes N/A N/A 2032 $1,036,224 14 $115,568

Aggregate N/A N/A 2032 $1,036,224 14 $115,568


11

SECTION 4 Development of Contribution Requirements Required Municipal Contributions (Minimum Municipal Obligations)

The Minimum Municipal Obligation (MMO) of the Plan is based on the Normal Cost Percentage

and other components shown below. The normal cost percentage is applied to the estimated

payroll of the members for the applicable budget year.

1. Normal Cost $246,877 2. Total Annualized 2018 Payroll $1,448,701 3. Percentages for Budgets a. Normal Cost (1 divided by 2) 17.041% b. Administrative Expense (as a percent of Payroll) 5.200% c. Gross Normal Cost 22.241% 4. Net Amortization Payments $115,568 5. Funding Adjustment $0 NOTES: In addition to the components shown in Items 3, 4, and 5, the MMO calculation includes a deduction for estimated employee contributions, if any. The MMO is the obligation of the local government unit sponsoring the Plan. State Aid, if available, may be used to pay the MMO, but the plan sponsor is responsible for any shortfall. The MMO components above are calculated as of January 1. Contributions made during the plan year should be adjusted with interest at the assumed rate of 7.25% to reduce the probability of a contribution loss.


12

SECTION 5 Risk Measurements

A. Sensitivity Analysis

The actual costs of the plan will be determined by the experience of the plan over time. The

projected liabilities shown in this (or any other) valuation of the plan are dependent upon the

assumptions made. The assumed interest rate is one assumption that has a significant impact on

the expected costs of the plan. To highlight the effect of this assumption on the calculated

liabilities and contribution requirements of the plan, we are showing the impact of a change of 1%

in the interest rate.

1% Decrease Current % 1% Increase

Interest Rate 6.25% 7.25% 8.25%

Actuarial Accrued Liability $15,695,238 $14,056,816 $12,697,393 Actuarial Value of Assets ($13,020,592) ($13,020,592) ($13,020,592) Unfunded Actuarial Accrued Liability $2,674,646 $1,036,224 ($323,199)

Funded Ratio 83.0% 92.6% 102.5%

Normal Cost $309,405 $246,877 $198,877 Amortization Payment / (Funding Adjustment) $271,366 $115,568 ($32,320)

Estimated Impact on MMO $218,326 N/A ($195,888) B. Asset Volatility Risk

As plans mature they become more sensitive to investment swings. Relatively small changes in

investment return can result in big changes in contribution requirements. Based on the market

value of assets ($12,646,336), a 10% investment loss relative to the assumed interest rate of 7.25%

(i.e., -2.75% actual one-year return) would result in an increase in the amortization payment of

$122,874 based on the funded status and average future service as of the valuation date.

This illustration is provided to help you understand the potential impact of investment losses on

contribution requirements and does not take into account the impact of asset smoothing or any

other factors.


13

SECTION 5 Risk Measurements C. Alternative Liability Measurement

As mentioned in Section 1, this report was prepared to satisfy the funding and disclosure

requirements of Act 205 of 1984. The liabilities shown in this valuation are calculated on a going

concern basis, meaning that the pension plan is presumed to continue to operate indefinitely. As

such, the interest rate assumption used to value plan liabilities was selected to represent the

expected long-term investment return on plan assets.

The results disclosed on this page are provided for informational purposes only and illustrate the

liabilities and funding status measured on a terminal basis (rather than going concern basis), which

is believed to be more closely associated with a “settlement value” of the plan. However, this is

not based on any specific annuity quote and should not be construed as such. The primary

differences between these measurements and those made for funding and state reporting purposes

include:

• benefits valued are only those earned as of the valuation date (accrued benefits)

• assets are reported at fair market value as of the valuation date

• the interest rate of 3.25% was selected to approximate a low-risk bond rate which may be

representative of annuity pricing as of the valuation date

Assets at Market Value $12,646,336

Actuarial Present Value of Accrued Benefits 1. Retired $15,934,208 2. Deferred 1,202,401 3. Active 4,848,938 4. Total $21,985,547


14

SECTION 6 Actuarial Basis of Valuation Actuarial Assumptions as of January 1, 2019

A. Economic 1. Interest Rate: 7.25% per year.

[This assumption represents the expected long-term rate of return, including inflation. It is based on the current investment policy of the plan and expected returns for the asset classes. Historical average returns and long-term capital market assumptions were considered in developing the expected return for each asset class.]

2. Salary Projection: 4.50% per year.

[This assumption represents expectations of future salary increases. Allowance is made not only for base rate changes but also for such factors as merit increases, longevity increases, and promotions, which may occur over a participant’s career. This assumption is based on an analysis of past salary increases of covered workers, expectations of future wage increases and inflation, and general trends for similar workers.]

3. Inflation: 2.75% per year.

[The long-term inflation assumption is based on a blend of historical average inflation (inflation has averaged 3.3% over the last 40 years) and expectations of lower inflation over the short-term.]

B. Employee Characteristics

1. Mortality: RP-2014 Mortality Table with 50% Blue Collar adjustment, rates set forward 7 years for disabled members.

[The RP-2014 mortality table is the most recent mortality table promulgated by the Society of Actuaries for general pension plan valuation purposes. As such, we believe that it is a reasonable representation of current mortality patterns.]

2. Mortality Improvement: Rates derived from the Long-Range

Demographic Assumptions for the 2015 Social Security Administration’s Trustee Report.

[We believe that the mortality improvement assumed in the Social Security Administration’s 2015 Trustees Report better reflects historical mortality trends, and therefore, is more likely to represent future mortality improvement, than the MP scales that have been released in conjunction with (and subsequent to) the RP-2014 table, which was based on a period of significant mortality improvement.]

3. Withdrawal: Table T-1; Actuary’s Pension Handbook 4. Disablement: Rates derived from the Social Security

Administration’s 2010 projections of disability incidence (ultimate rates only).


15

SECTION 6 Actuarial Basis of Valuation Actuarial Assumptions as of January 1, 2019 – (Continued)

B. Employee Characteristics (Cont.)

5. Marital Status: 90% of participants are assumed to be married; all spouses are of the opposite sex. Female spouse assumed to be 3 years younger than male spouse.

6. Preretirement Death: 50% of deaths occurring before normal

retirement eligibility are assumed to occur in the line of duty

C. Retirement

1. Valuation Retirement Age: Hired Before October 1, 2018: Age Years of Service 20 21+ 50 50% 50% 51-56 50% 40% 57-61 75% 65% 62-later 100% 100% Hired After October 1, 2018: Age Years of Service 25 26+ 50 50% 50% 51-56 50% 40% 57-61 75% 65% 62-later 100% 100% 2. Benefit Form: Joint and 100% survivor annuity

[Due to the size of the plan, the demographic assumptions are determined by trends experienced by not only this plan but also by municipal plans in general. The retirement assumption was first utilized for the January 1, 2011 AVR and is believed to be reasonably related to plan experience.]


16

SECTION 6 Actuarial Basis of Valuation

Actuarial Cost Method The actuarial costs of this Plan are determined under the Entry Age Normal Actuarial

Cost Method as prescribed by Act 205 of 1984. The total contribution (the Financial

Requirements of the Pension Plan) is made up of three components: Normal Cost,

Administrative Expense and Amortization Payment (or Funding Adjustment).

The Normal Cost for each active participant covered by the Plan is calculated to be the

annual contribution necessary to completely fund the participant’s pension by the participant’s

retirement age. Contributions are assumed to begin with the year of employment and to be a

constant percentage of the participant’s annual pay. The Normal Cost for the Plan is the sum of

the individually computed amounts. The Plan Normal Cost is expressed as a percentage of the

total annual payroll of the participants to be used in the budgeting of required contributions.

The Administrative Expense is the estimated annual expense to be incurred by the fund

for the contribution year for which the Financial Requirements are determined.

The Amortization Payment is the sum of the annual level amortization contribution

requirements specified by the Act for the applicable portions of the Unfunded Actuarial Accrued

Liability. The initial Unfunded Actuarial Accrued Liability was established in 1985.

Subsequent experience relative to valuation assumptions, changes in benefit provisions, and

changes in valuation assumptions result in increases or decreases to the Unfunded Actuarial

Accrued Liability. If the Unfunded Actuarial Accrued Liability is negative, the Amortization

Payment is zero and a Funding Adjustment is created.

The Actuarial Accrued Liability of the Plan is the total actuarial present value of all

future benefits less the actuarial present value of the future Normal Costs. The total Unfunded

Actuarial Accrued Liability as of a valuation date is the Actuarial Accrued Liability less the total

value of all assets owned by the Plan.


17

SECTION 6 Actuarial Basis of Valuation Actuarial Value of Assets

A. Source of Asset Information

Asset information for the period January 1, 2017 to December 31, 2018 was provided by

PNC Institutional Asset Management and TD Ameritrade. The reported market value of

assets as of December 31, 2018 is summarized below by type:

Cash and Cash Equivalents $180,554.41

U.S. Government & Agency Securities 2,628,101.93

Mutual Funds - Fixed Income .28

Corporate Debt 1,071,148.45

Mutual Funds - Balanced 5,379,334.64

Equities 3,374,777.30

Accrued Income 29,321.94

Total $12,663,238.95

B. Market Value as of January 1, 2019

For valuation purposes, the market value of assets is the value reported above, plus end-of-year

accrual adjustments, if any.

Reported Market Value $12,663,238.95

Employee Contributions Receivable 110.00

Refunds Payable (17,012.90)

Market Value of Assets $12,646,336.05 (see continuation of development on next page)


18

SECTION 6 Actuarial Basis of Valuation Actuarial Value of Assets - (Continued) C. Description of Method

The Actuarial Value of Assets is determined by a smoothing formula which phases in investment gains and losses (measured against the interest rate assumption) over a four-year

period. The resulting value is further subject to a minimum of 80% and a maximum of

120% of the current market value. D. Development of the Actuarial Value of Assets Market Value at January 1, 2019 $12,646,336 Actual vs. Expected Return From To Gain (Loss) Fraction Deferred 01/01/2015 12/31/2015 ($1,219,454) 0% 01/01/2016 12/31/2016 ($272,866) 25% $68,216 01/01/2017 12/31/2017 $1,234,013 50% ($617,007) 01/01/2018 12/31/2018 ($1,230,730) 75% $923,047

Preliminary Adjusted Value $13,020,592 Low Limit 80% of M. V. $10,117,069 High Limit 120% of M. V. $15,175,603 Actuarial Value of Assets at January 1, 2019 $13,020,592

8,000,000

9,000,000

10,000,000

11,000,000

12,000,000

13,000,000

14,000,000

2009 2011 2013 2015 2017 2019

Actuarial Value of Assets v. Market Value of Assets

MVA

AVA


19

SECTION 7 Glossary

Accrued Benefit

The portion of the participant’s retirement benefit that is attributable to service completed before the calculation date. The calculation typically uses actual service as of the calculation date and may involve other factors such as average pay at the determination date and projected service through the retirement eligibility date. Act 205 of 1984

Municipal Pension Plan Funding Standard and Recovery Act of December 18, 1984, P.L. 1005, No. 205. The Act controls pension funding in Pennsylvania. This Act also provides for reporting of actuarial information and for a recovery program for qualifying municipalities. Actuarial Accrued Liability

The portion of the actuarial cost assigned to prior years. Actuarial Assumptions

Factors used by the actuary to forecast future events. These factors include items relating to future economic conditions, the survival of the participants and their beneficiaries, and the length of employment. Actuarial Cost Method

A means of assigning costs to periods of employment. This method is used to determine a funding level that will provide sufficient assets to pay benefits for each participant upon retirement. Act 205 specifies that the entry age normal cost method, as described in the Act, should be used for this determination. Actuarial Present Value

The lump sum value that is equivalent to an expected series of future payments. This value is determined by using the actuarial assumptions. An actuarial present value, as of the valuation date, represents the amount of funds that would be sufficient to provide the series of payments, if experience precisely matches the actuarial assumptions.


20

SECTION 7 Glossary – (Continued)

Actuarial Value of Assets

The value of current plan assets which is used by the actuary to evaluate the current funding status and determine future funding requirements. Pennsylvania Code, Title 16, Part IV, Section 203.2(a) requires that this value be between 80 and 120 percent of the fair market value of the assets. Administrative Expenses

The average of expenses to administer the plan that is paid in the year preceding the most recent valuation and the anticipated expenses for the year following this valuation. The average is converted to a percentage of payroll and used as part of the Minimum Municipal Obligation calculation. Amortization Payment

The annual payment required to eventually eliminate the unfunded actuarial accrued liability according to the schedule established in Act 205. Experience Gain or Loss

The effect on the actuarial accrued liability of differences between events as predicted by the actuarial assumptions and those that actually occurred. This difference can increase or decrease the contribution in future years. Funded Ratio

The actuarial value of assets divided by the actuarial accrued liability. Funding Adjustment

Occurs when the actuarial value of assets exceeds the actuarial accrued liability; it is defined by Act 205 as 10 percent of the excess. This adjustment reduces the amount that must be contributed to the pension plan. General Municipal Pension System State Aid

Annually municipalities receive a portion of the insurance premium tax levied on casualty insurance companies headquartered outside of Pennsylvania. If they have paid firefighters, they also receive a portion of the premium tax on out-of-state fire insurance companies. These taxes are distributed according to formulae contained in Act 205.


21

SECTION 7 Glossary – (Continued)

Minimum Municipal Obligation

The amount that must be contributed to a pension plan by a municipality for a given year. The calculation of this amount uses the normal cost, anticipated administrative expenses, amortization payment or funding adjustment, and anticipated employee contributions to determine a municipality’s contribution requirement. General Municipal Pension System State Aid may be used to reduce the contribution. Normal Cost

The actuarial cost assigned to a given year to pay for the portion of the anticipated benefit derived from service during that year. Unfunded Actuarial Accrued Liability

The amount by which the actuarial accrued liability exceeds the actuarial value of assets. A valuation will identify the value of changes in the unfunded actuarial accrued liability that result from changes in plan benefits, actuarial assumptions, or actuarial gains and losses. A zero or negative unfunded actuarial accrued liability does not mean that no future contributions are required, only that the current accumulation of plan assets is deemed on or ahead of schedule. Vesting

The participant’s non-forfeitable right to receive a benefit, provided that the participant survives until benefit eligibility.


22

CITY OF BUTLER POLICE PENSION PLAN Active Participant Data Valuation Date: January 1, 2019

Participant Hire Date Cur Svc Retire Total Svc/ Monthly Accrued Vest Vested Accum Name Birth Date Sex / Age / Age Date Ret Age Pension Pension % Benefit Contrib BIZUB 12/7/1983 M 10/4/2015 3.0 10/4/2035 20.0 2,020.25 303.04 0% 0.00 7,194.62 MYLES 31 35 51 DOBSON 2/13/1992 M 6/5/2017 1.0 2/13/2042 24.0 1,951.98 72.30 0% 0.00 3,264.91 WILLIAM 25 26 50 DOCTOR 8/31/1989 M 9/16/2018 .0 8/31/2039 20.0 1,545.64 0.00 0% 0.00 542.80 RYAN 29 29 50 FATTA 11/11/1979 M 9/14/2008 10.0 11/11/2029 21.0 3,006.65 1,396.82 0% 0.00 28,713.01 ANTHONY 28 39 50 FLEMING 10/1/1991 M 6/27/2016 2.0 10/1/2041 25.0 2,134.67 151.80 0% 0.00 5,429.49 KORY 24 27 50 FORSYTHE 1/13/1984 M 3/18/2012 6.0 1/13/2034 21.0 2,722.89 740.92 0% 0.00 18,596.83 CALEB 28 34 50 GROOMS 3/1/1969 M 10/1/2000 18.0 10/1/2020 20.0 2,989.25 2,690.33 100% 2,690.33 45,168.74 BRIAN 31 49 51 HOLLOBAUGH 12/17/1971 M 10/21/1996 22.0 12/17/2021 25.0 3,595.09 2,952.76 100% 2,952.76 54,699.82 JAMES 24 47 50 HOWARD 9/23/1989 M 12/28/2015 3.0 9/23/2039 23.0 2,183.99 248.18 0% 0.00 6,617.00 MARC 26 29 50 KLOPFER 2/19/1991 M 3/14/2016 2.0 2/19/2041 24.0 2,195.57 162.64 0% 0.00 6,125.38 ERIC 25 27 50 LITZ 7/13/1965 F 10/5/2000 18.0 10/5/2020 20.0 2,665.24 2,398.72 100% 2,398.72 44,117.22 CHERYL 35 53 55 NIEDERLANDER 2/2/1994 M 6/5/2017 1.0 2/2/2044 26.0 2,038.74 66.73 0% 0.00 3,264.91 ANDREW 23 24 50 NOVAK 9/14/1987 M 5/7/2017 1.0 9/14/2037 20.0 1,748.63 87.43 0% 0.00 3,436.20 KEVIN 29 31 50 O'NEILL 12/16/1972 M 11/1/2018 .0 11/1/2043 25.0 3,172.57 0.00 0% 0.00 644.51 ROBERT 45 46 70 RENSEL 3/2/1974 M 3/6/2001 17.0 3/2/2024 22.0 3,210.24 2,307.57 100% 2,307.57 45,202.91 CHAD 27 44 50 ROGERS 3/25/1985 M 11/18/2018 .0 11/18/2043 25.0 1,318.13 0.00 0% 0.00 193.50 BENJAMIN 33 33 58 SHULIK 5/5/1987 M 7/15/2012 6.0 5/5/2037 24.0 2,915.20 647.82 0% 0.00 17,642.71 NATHAN 25 31 50 SHULIK 5/5/1987 M 2/12/2012 6.0 5/5/2037 25.0 2,918.19 648.49 0% 0.00 18,847.50 NICHOLAS 24 31 50 SPANGLER 6/15/1972 M 3/1/1998 20.0 6/15/2022 24.0 3,166.55 2,503.20 100% 2,503.20 49,013.50 BENJAMIN 25 46 50 SULERUD 10/23/1992 M 10/21/2018 .0 10/21/2043 25.0 1,443.77 0.00 0% 0.00 349.30 MICHAEL 25 26 50 VILLOTTI 3/2/1971 M 8/19/2007 11.0 8/19/2027 20.0 2,776.94 1,527.32 0% 0.00 31,422.99 DAVID 36 47 56


23

CITY OF BUTLER POLICE PENSION PLAN Active Participant Data Valuation Date: January 1, 2019

Participant Hire Date Cur Svc Retire Total Svc/ Monthly Accrued Vest Vested Accum Name Birth Date Sex / Age / Age Date Ret Age Pension Pension % Benefit Contrib WALTERS 7/11/1975 M 9/16/2007 11.0 9/16/2027 20.0 2,776.43 1,527.04 0% 0.00 31,232.79 JEREMY 32 43 52 Active Participants: 22 20,433.09 421,720.64 54,496.60 12,852.57 * Monthly Pension Benefit was calculated using service to January 1st following Retirement date.


24

CITY OF BUTLER POLICE PENSION PLAN Inactive Participant Data Valuation Date: January 1, 2019 Participant Cur Benefit Ret Pension Years ----------Survivor---------- Name Sex Birth Date Age Commence Age Benefit Certain Benefit Sex Birth Date Deferred Participant(s) DALCAMO M 2/24/1973 46 2/24/2023 50 2,166.30 0 2,166.30 F 5/26/1971 DAVID JOHNSON M 3/12/1969 50 4/1/2019 50 2,851.66 0 0.00 JOHN Deferred Participant(s) : 2 5,017.96 2,166.30 Disabled Participant(s) LONG M 12/30/1962 56 1/1/1991 28 754.21 0 754.21 F 12/30/1965 KENNETH Disabled Participant(s) : 1 754.21 754.21 Retired Participant(s) ADAM M 12/11/1964 54 8/24/2018 54 3,641.87 0 3,641.87 F 5/15/1965 DAVID BOTSIS M 4/17/1941 78 10/1/1994 53 1,713.95 0 0.00 PETER BROWN M 4/5/1962 57 7/31/2018 56 4,194.20 0 4,194.20 F 10/23/1970 RONALD CANNON M 12/7/1944 74 5/4/1996 51 1,811.13 0 1,811.13 F 10/12/1946 PATRICK CLAUSER M 1/6/1930 89 6/30/1985 55 1,577.25 0 1,577.25 F 11/21/1923 HENRY CONNELLY M 12/14/1931 87 9/23/1979 48 953.58 0 953.58 F 3/2/1934 RONALD CORNIBE M 9/19/1956 62 5/1/2009 53 2,982.75 0 2,982.75 F 2/11/1958 BRADLEY CORNIBE JR M 11/2/1936 82 12/1/1998 62 2,439.97 0 2,439.97 F 1/25/1947 PAUL DALCAMO M 10/27/1947 71 8/22/2003 56 3,036.88 0 3,036.88 F 1/4/1955 FRANK DALCAMO M 10/2/1969 49 1/1/2015 45 3,068.31 0 3,068.31 F 6/6/1967 MICHAEL DOBSON M 5/21/1955 64 3/1/2004 49 2,414.42 0 2,414.42 F 10/28/1962 MICHAEL EVANKO M 10/13/1962 56 3/1/2015 52 3,143.82 0 3,143.82 F 7/29/1972 STEPHEN FENNELL M 9/15/1955 63 3/3/2012 56 3,697.09 0 3,697.09 F 8/12/1972 TIMOTHY FIERST M 11/18/1957 61 7/30/2016 59 3,702.89 0 3,702.89 F 11/26/1955 RONALD FUNDARK M 11/12/1968 50 11/12/2018 50 2,490.50 0 2,490.50 F 4/18/1969 RONALD


25

CITY OF BUTLER POLICE PENSION PLAN Inactive Participant Data Valuation Date: January 1, 2019 Participant Cur Benefit Ret Pension Years ----------Survivor---------- Name Sex Birth Date Age Commence Age Benefit Certain Benefit Sex Birth Date GIGER M 5/5/1961 58 12/13/2011 51 2,736.56 0 2,736.56 F 7/22/1963 SYLVAN HEATH M 7/27/1931 87 3/4/1972 41 573.76 0 573.76 F 3/11/1938 EUGENE HERTZOG M 11/28/1960 58 9/1/2004 44 2,174.54 0 2,174.54 F 10/22/1960 JOHN JONES M 3/2/1949 70 3/2/1999 50 1,981.40 0 1,981.40 F 9/3/1960 DONALD MACURDY M 4/15/1952 67 10/2/2007 55 2,846.86 0 2,846.86 F 7/24/1952 DAVID MAYHUGH M 10/10/1973 45 7/22/2018 45 3,211.08 0 3,211.08 F 12/12/1971 WILLIAM PATE M 10/22/1959 59 6/10/2007 48 2,356.12 0 0.00 RONALD PEFFER M 5/9/1965 54 8/2/2007 42 2,165.97 0 2,165.97 F 11/30/1965 MARK PLAISTED M 2/22/1949 70 6/6/2007 58 2,996.40 0 2,996.40 F 11/23/1961 JOHN TRINKO M 9/15/1936 82 8/1/1989 53 1,410.78 0 1,410.78 F 2/11/1942 THOMAS ZIRNSAK M 8/15/1949 69 8/15/1999 50 1,614.65 0 1,614.65 F 7/1/1958 DONALD

Retired Participant(s) : 26 64,936.73 60,866.66 Survivor Participant(s) CAMPBELL F 4/25/1936 83 5/25/1985 49 1,263.87 0 0.00 KAY DRAPER F 1/26/1934 85 4/16/1976 42 729.72 0 0.00 FRANCES FISHEL F 6/25/1943 76 6/12/1998 55 1,946.27 0 0.00 EILEEN GAMBLE F 2/15/1932 87 3/12/1972 40 229.73 0 0.00 EVELYN GOETTLER F 12/17/1927 91 5/17/1998 70 419.25 0 0.00 ALICE HUDAK F 9/28/1923 95 4/14/1971 48 569.98 0 0.00 DOLORES LASKY F 9/23/1923 95 3/19/1973 49 728.97 0 0.00 ELEANOR NIGGEL F 2/2/1949 70 8/29/1998 50 1,831.38 0 0.00 CAROL STIRLING F 12/20/1934 84 10/1/1986 52 1,294.83 0 0.00 PHYLLIS


26

CITY OF BUTLER POLICE PENSION PLAN Inactive Participant Data Valuation Date: January 1, 2019 Participant Cur Benefit Ret Pension Years ----------Survivor---------- Name Sex Birth Date Age Commence Age Benefit Certain Benefit Sex Birth Date WALSH F 6/16/1947 72 2/16/1976 29 667.08 0 0.00 SHERRON Survivor Participant(s) : 10 9,681.08 0.00

Inactive Participants: 39 80,389.98 63,787.17

Documents

ACTUARIAL VALUATION REPORT · Summary of Plan Membership . Valuation Date 1/1/2019 1/1/2017 Participants Active 22 21 Retired 26 26 Disabled 1 1 Survivor 10 7 Deferred 2 2 Total 61