2023 Annual Comprehensive Report

Contributions The City is required by Article 12D of G.S. Chapter 143 to provide these retirement benefits and has chosen to fund the amounts necessary to cover the benefits earned on a pay as you go basis through appropriations made in the General Fund operating budget and to also advance fund amounts as available. Contributions are not required to be made by employees, and as such, there were none. The City’s obligation to contribute to this plan is established and may be amended by the North Carolina General Assembly. The actuarially determined contribution rate of $4,698,037 for FY2023 is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City contributed $3,088,270 in FY2023. These amounts represent 11.20% and 7.36% of covered employee payroll, respectively. Administrative costs of the Separation Allowance are financed through investment earnings. The annual required contribution for the current year was determined as part of the December 31, 2021 actuarial valuation using the entry age normal actuarial cost method, amortized over a level dollar closed period. The actuarial assumptions include (a) 5.5% investment rate of return and (b) projected salary increase of 3.25% to 7.75%. Both (a) and (b) included an inflation component of 2.5%. The assumptions did not include post-retirement benefit increases. The actuarial value of assets was determined using the market value of investments. The remaining amortization period at December 31, 2020 was 10 years. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2023, the City reported a net pension liability of $29,497,172. The total pension liability was measured as of December 31, 2022 based on a December 31, 2021 actuarial valuation. The total pension liability was rolled forward to December 31, 2022 utilizing standard actuarial update rollfoward procedures incorporating the actuarial assumptions. For the year ended June 30, 2023, the City recognized pension expense of $3,958,016. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources, based on amounts computed as of the December 31, 2022 measurement date.

Deferred Outflows

Deferred Inflows

of Resources

of Resources

Differences between expected and actual experience

$

2,652,867 2,528,931

$

Changes of assumptions and other inputs

284,276

Net difference between projected and actual earnings on pension plan investments City contributions subsequent to the measurement date

840,375 1,755,186 7,777,359

Total

$

$

284,276

$1,755,186 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a decrease of the net pension liability in the year-ended June 30, 2024. Other amounts reported as deferred inflows and deferred outflows of resources related to pensions will be recognized in pension expense as follows:

Year ended June 30: 2024

$

1,619,251 1,783,762 1,436,602 738,143 160,139 5,737,897

2025 2026 2027 2028

$

40tt