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Comprehensive Annual Financial Report

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Comprehensive Annual Financial Report COMPREHENSIVE ANNUAL FINANCIAL REPORT 2015 George Hopkins, Executive Director A Pension trust fund of the State of Arkansas Prepared by the Staff of ARKANSAS TEACHER RETIREMENT SYSTEM 1400 West Third Street • Little Rock, Ar 72201 501.682.1517 • 1.800.666.2877 • artrs.gov 2 2015 COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS INTRODUCTION Letter of Transmittal ....................................................................................................................................................................................... 6 Board of Trustees ............................................................................................................................................................................................ 8 Organizational Chart and Administrative Staff ........................................................................................................................................... 9 Professional Consultants ............................................................................................................................................................................. 10 FINANCIAL Financial Statements: Statement of Plan Net Position ............................................................................................................................................................... 14 Statement of Changes in Plan Net Position ........................................................................................................................................... 15 Notes to Financial Statements ................................................................................................................................................................ 16 Required Supplementary Information: Schedule of Changes in Net Pension Liability and Related Ratios ...................................................................................................... 27 Schedule of Contributions ....................................................................................................................................................................... 28 Schedule of Investment Returns ............................................................................................................................................................. 28 Notes to Required Supplementary Information ................................................................................................................................... 29 Schedule of Selected Information .......................................................................................................................................................... 30 INVESTMENTS Investment Consultant’s Report ................................................................................................................................................................. 32 Investment Policies and Procedures .......................................................................................................................................................... 36 Total Return by Fiscal Year ........................................................................................................................................................................... 42 Schedule of Investment Results ................................................................................................................................................................. 43 Description of Benchmarks ......................................................................................................................................................................... 49 Top Largest Holdings – Fixed Income ......................................................................................................................................................... 53 Top Largest Holdings – Domestic/Global Equities .................................................................................................................................... 53 Top Largest Holdings – Arkansas Related .................................................................................................................................................. 54 ACTUARIAL Actuary’s Certification Letter ....................................................................................................................................................................... 56 Exhibit 1 – Computed Actuarial Liabilities ................................................................................................................................................. 59 Exhibit 2 – Employer Contribution Rate ..................................................................................................................................................... 60 Schedule of Active Member Valuation Data .............................................................................................................................................. 61 Schedule of Retirees and Beneficiaries Added To and Removed From Rolls ......................................................................................... 61 Short Condition Test .................................................................................................................................................................................... 62 Summary of Actuarial Assumptions and Methods ................................................................................................................................... 63 Table I – Single Life Retirement Values ....................................................................................................................................................... 64 Table II – Probabilities of Retirement for Members ................................................................................................................................... 65 Table III – Probabilities of Reduced Retirement for Members and Duration of T-DROP for Members ................................................. 66 Table IV – Teachers Separations From Active Employment Before Age and Service Retirement & Individual Pay Increases .......... 67 Table V – Support Employees Separations From Active Employment Before Age and Service Retirement & Individual Pay Increases ... 69 Actuarial Gain (Loss) by Risk Area ............................................................................................................................................................... 71 Comments ..................................................................................................................................................................................................... 72 Schedule of Retired Members by Type of Benefit ..................................................................................................................................... 73 Schedule of Average Benefit Payments ..................................................................................................................................................... 74 STATISTICAL Schedule of Revenue by Source .................................................................................................................................................................. 76 Schedule of Expense by Type ...................................................................................................................................................................... 77 Schedule of Benefit Expenses by Type ....................................................................................................................................................... 78 Schedule of Participating Employers ......................................................................................................................................................... 79 2015 COMPREHENSIVE ANNUAL FINANCIAL REPORT 3 4 2015 COMPREHENSIVE ANNUAL FINANCIAL REPORT Introduction 2015 COMPREHENSIVE COMPREHENSIVE ANNUAL ANNUAL FINANCIAL FINANCIAL REPORT REPORT 5 LETTER OF TRANSMITTAL February 4, 2016 Board of Trustees Arkansas Teacher Retirement System 1400 West Third Street Little Rock, AR 72201 The Arkansas Teacher Retirement System (the “System” or ATRS) is pleased to submit this Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2015. The ATRS CAFR provides comprehensive information on the retirement plan that ATRS administers. Responsibility for both the accuracy of the data and the completeness and fairness of presentation rests with the System. To the best of the System’s knowledge and belief, the enclosed data is accurate in all material respects and presents fairly the System’s financial status and changes in the financial condition. The 2015 Financial Report is presented in five sections. Contents are summarized below (a detailed Table of Contents may be found on page 3). Introductory Section: This section contains the transmittal letter, the Board of Trustees, and organizational chart. Financial Section: This section provides the System’s financial statements, required supplementary information, and supporting schedules with additional information about the System’s expenses. Investment Section: This section includes the investment consultant’s report, investment policies, asset allocation, and investment results. Actuarial Section: This section provides the certification letter from the independent actuary, supporting schedules,
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