FRS: n/a values for amortization period for certain June 30, 2019 items

[donboyd5]

In Reason's "Florida FRS inputs.xlsx" file, in the "Amort Input" sheet, the column amo_period is n/a for one row for each class other than drop. In each case, the surrounding values have amo_period of 20. Example copied below, for the regular class.

Is this a data transcription error, or is it this way in the original pdf. @gchen3, do you know the answer?

[gchen3]

@donboyd5 In FY2023 FRS AV report (https://frs.fl.gov/forms/2023_Valuation.pdf) p 29. "NA" has a footnote indicating a different amortization approach for this UAL decrease: "2 Unlike all other bases, which are amortized as a level percentage of UAL payroll over a specified period, this credit base is amortized over a closed period in a manner that mirrors the projected payroll for the closed Tier I population of the FRS Pension Plan. Please see page A-2 for further explanation and page A-3 for amortization schedule. That schedule amortizes a greater percentage of the remaining balance in each plan year illustrated than would a 20-year level percentage of pay amortization factor."

Here is the explanation for the FY 2019 UAL decrease (negative amo_balance in the above table). "The decrease in UAL arising as a result of changing the actuarial cost allocation method from Ultimate EAN to Individual EAN in 2019 is amortized separately from other UAL bases. The change in UAL due to the actuarial cost allocation method change is specific to active Tier I members whose calculated normal costs are higher under Individual EAN than under Ultimate EAN. Since there is no change in the projected benefits for Tier I members, there is a corresponding decrease in Actuarial Liability. Therefore, the decrease in the UAL due to the actuarial cost allocation method change is amortized over a closed 30-year period in a manner than mirrors the projected payroll of the closed Tier I population in the FRS Pension Plan. This method was discussed and illustrated in Milliman’s October 23, 2019 and October 28, 2019 presentation materials to the FRS Actuarial Assumption Conference, including quantified year-by-year detail on the amortization schedule. " (Page A-2, FY2023 FRS AV report (https://frs.fl.gov/forms/2023_Valuation.pdf)

[donboyd5]

Thanks @gchen3. Since the Reason model is using the 2022 valuation I'm pasting the corresponding 2022 page below. Footnote 2, relating to "2019 Method Changes" with a date established of June 30, 2019, says:

2 Unlike all other bases, which are amortized as a level percentage of UAL payroll over a specified period, this credit base is amortized over a closed period in a manner that mirrors the projected payroll for the closed Tier I population of the FRS Pension Plan. Please see page A-2 for further explanation and page A-3 for amortization schedule. That schedule amortizes a greater percentage of the remaining balance in each plan year illustrated than would a 20-year level percentage of pay amortization factor.

It seems like the 2022 and 2023 notes are consistent albeit written differently.

The 2022 note says that more detail is available on page A-2 and A-3. I think there's nothing we should do now but it may eventually be possible (?) to improve upon the amortization calculations in the model by using information on those pages.