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Cabarrus County, North Carolina
<br />Notes to the Financial Statements
<br />For the Fiscal Year Ended June 30, 2009
<br />Funded Status and Funding Progress. As of December 31, 2007, the most recent actuarial valuation date, the plan
<br />was not funded. The actuarial accrued liability for benefits and, thus the unfunded actuarial accrued liability (UAAL)
<br />was $21,441,875. The covered payroll (annual payroll of active employees covered by the plan) was $25,327,869
<br />and the ratio of the UAAL to the covered payroll was 84.7%. Actuarial valuations of an ongoing plan involve
<br />estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into
<br />the future. Examples include assumptions about future employment, mortality and healthcare trends. Amounts
<br />determined regarding the funded status of the plan and the annual required contributions of the employer are
<br />subject to continual revision as actual results are compared with past expectations and new estimates are made
<br />about the future. The schedule of funding progress, presented as required supplementary information following the
<br />notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan
<br />assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
<br />Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are used on the
<br />substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits
<br />provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer
<br />and plan members at this point. The actuarial methods and assumptions used include techniques that are
<br />designed to reduce the effects of short term volatility in actuarial accrued liabilities and the actuarial value assets,
<br />consistent with the long term perspective of the calculations.
<br />In the December 31, 2007 actuarial valuation, the projected unit credit actuarial cost method was used. The
<br />actuarial assumptions included a 4.00% investment rate of return (net of administrative expenses), which is the
<br />expected long-term investment return on the employer's own investments calculated based on the funded level of
<br />the plan at the valuation date, and an annual medical cost trend increase of 11.00 to 5.00 percent annually. Both
<br />rates included a 3.75 percent inflation assumption. The actuarial value of assets, if any, was determined using
<br />techniques that spread the effects of short term volatility in the market value of investments over a five year period.
<br />The UAAL is being amortized as a level percentage of projected payroll on an open basis. The remaining
<br />amortization period at December 31, 2007 was 30 years.
<br />7. Pension Plan and Benefit Obligations
<br />a. Local Governmental Employees' Retirement System
<br />Plan Description. Cabarrus County and the Alliance contribute to the statewide Local Governmental Employees'
<br />Retirement System (LGERS), acost-sharing multiple-employer defined benefit pension plan administered by the
<br />State of North Carolina. LGERS provides retirement and disability benefits to plan members and beneficiaries.
<br />Article 3 of G.S. Chapter 128 assigns the authority to establish and amend benefit provisions to the North Carolina
<br />General Assembly. The Local Governmental Employees' Retirement System is included in the Comprehensive
<br />Annual Financial Report (CAFR) for the State of North Carolina. The State's CAFR includes financial statements
<br />and required supplementary information for LGERS. That report may be obtained by writing to the Office of the
<br />State Controller, 1410 Mail Service Center, Raleigh, North Carolina 27699-1410, or by calling (919) 981-5454.
<br />Funding Policy. Plan members are required to contribute six percent of their annual covered salary. The County
<br />and the Alliance are required to contribute at an actuarially determined rate. For the County, the current rate for
<br />employees not engaged in law enforcement and for law enforcement officers is 4.89% and 4.86% respectively, of
<br />annual covered payroll. For the Alliance, the current rate for employees is 4.86% of annual covered payroll. The
<br />contribution requirements of members and of Cabarrus County and the Alliance are established and may be
<br />amended by the North Carolina General Assembly. The County's contribution to LGERS for the years ended June
<br />30, 2009, 2008, and 2007 were $1,796,672, $1,623,545 and $1,467,622, respectively. The Alliance's contributions
<br />to LGERS for the years ended June 30, 2009, 2008, 2007, and 2006, were $ 453,071, $430,211, $390,846, and
<br />$364,602 respectively. The contributions made by the County and the Alliance equaled the required contributions
<br />for each year.
<br />b. Law Enforcement Officers' Special Separation Allowance
<br />Plan Description. Cabarrus County administers a public employee retirement system (the "Separation Allowance");
<br />a single-employer defined benefit pension plan that provides retirement benefits to the County's qualified sworn law
<br />enforcement officers. The Separation Allowance is equal to .85 percent of the annual equivalent of the base rate of
<br />compensation most recently applicable to the officer for each year of creditable service. The retirement benefits are
<br />gg Attachment number 3
<br />G-8 Page 342
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