15-Attachment C - Actuarial Reports 2024.pdf

Retirement Plan for DPS Covered Employees of Dallas/Fort Worth International Airport Board

ACTUARIAL VALUATION REPORT

FOR THE YEAR BEGINNING JANUARY 1, 2025

Attachment C – Actuarial Reports

May 9, 2025

Board of Directors Dallas/Fort Worth International Airport Board PO Drawer DFW DFW Airport, TX 75261-9428

Dear Members of the Board, Subject: Actuarial Valuation as of January 1, 2025, for the DPS Covered Employees Plan

We certify that the information contained in this report is accurate and fairly presents the actuarial position of the Retirement Plan for DPS Covered Employees of Dallas/Fort Worth International Airport Board (the Plan) for the plan year commencing January 1, 2025.

Results of this report should not be used for any other purpose without consultation with the undersigned. Valuations are prepared annually as of January 1, the first day of the plan year. This report was prepared at the request of the Airport Board (the Board) and is intended for use by the Board and designated Airport staff and those designated or approved by the Board. This report may be provided to parties, other than those described above, only in its entirety and only with the permission of the Board.

All calculations have been made in conformity with generally accepted actuarial principles and practices, and with the Actuarial Standards of Practice issued by the Actuarial Standards Board. In our opinion, the results presented also comply with the Plan as amended and restated, and, where applicable, the Internal Revenue Code, ERISA, and the Statements of the Governmental Accounting Standards Board.

Actuarial Valuation The primary purposes of the valuation report are to determine the employer’s contribution for the upcoming fiscal year, to describe the current financial condition of the Plan, and to analyze changes in the Plan’s financial condition. Valuations are prepared annually, as of January 1 of each year, the first day of the plan year.

Governmental Accounting Standards Board The Plan began complying with Governmental Accounting Standards Board Statement No. 67 (GASB No. 67) with the plan year ending December 31, 2014. Due to the significant amount of disclosure information requested under this statement, all GASB related material will be provided in a separate report.

Financial Objectives and Actuarially Determined Contribution The employer contribution is established by the Board. The Board’s current intention is to contribute the Plan’s normal cost plus the net amortization payment to amortize the unfunded actuarial accrued liability (UAAL) (gain)/loss bases. Each UAAL (gain)/loss base has its own closed 15-year amortization period. In other words, the unfunded actuarial accrued liability (UAAL) as of January 1, 2020 was the initial UAAL

(gain)/loss base which was amortized over 15 years and has 10 years remaining as of January 1, 2025.

Each year a new UAAL (gain)/loss base is set up each with its own 15-year amortization period. Therefore, the UAAL loss base set up last year has 14 years remaining and the UAAL loss base set up for January 1, 2025 has 15 years remaining. This contribution amount is $13,788,242 for the fiscal year beginning October 1, 2025 and is the sum of the normal cost, a provision for administrative expenses, and the net amortization payments of the UAAL (gain)/loss bases described above. Dividing this by the January 1, 2025 covered payroll, the contribution is equivalent to 33.37% of pay. The sum of the remaining balances of the UAAL (gain)/loss bases as of the valuation date is equal to the Plan’s total UAAL. In our opinion, the actuarially determined contribution amount shown above meets the reasonable contribution requirement of the Actuarial Standards of Practice No.4.

Progress Toward Realization of Financial Objectives The funded ratio (the ratio of the actuarial value of assets to the actuarial accrued liability) decreased from the prior year. The funded ratio at January 1, 2025, is 83.2%, while it was 85.8% as of January 1, 2024. Most of the decrease is due to the losses on liability experience and the asset transfer to the General Employees Plan.

Benefit Provisions The actuarial valuation reflects the benefit and contribution provisions set forth in the Plan as of the valuation date. There are no ancillary benefits funded by a source independent of the Plan. There have been no changes in the benefit provisions since the prior valuation. Please see Table 19 of this report for more details.

Assumptions and Methods The actuarial assumptions and methods are set by the Board of Directors, based upon the recommendation of the actuary. The Board adopted the current assumptions and methods in conjunction with the 2021 Experience Study effective with the January 1, 2022 valuation. Please see the 2021 Experience Study report for more details of the assumption changes. We believe that the actuarial assumptions used in the measurements for funding purposes are reasonable and appropriate for that purpose, and that the assumptions are internally consistent, reasonable, and, where appropriate, based on the actual experience of the Plan. For a more detailed description of all of the actuarial assumptions, please see Table 18 of this report. There have been no changes to the actuarial assumptions and methods since the prior valuation.

The results of the actuarial valuation are dependent on the actuarial assumptions used. Actual results can and almost certainly will differ, as actual experience frequently deviates from the assumptions. Even seemingly minor changes in the assumptions can materially change the liabilities and calculated contribution amounts. Due to the limited scope of this assignment, GRS did not perform an analysis of the potential range of such possible future differences. The actuarial calculations are intended to provide information for rational decision making.

Section I of this report provides information required by the Actuarial Standards of Practice (ASOP) No. 51 – “Assessment and Disclosure of Risk Associated with Measuring Pension Obligations and Determining Pension Plan Contributions”. Please see Section I of this report for further information.

The undersigned are independent actuaries and consultants. Mr. White and Ms. Shaw are Enrolled Actuaries and are Members of the American Academy of Actuaries and both meet the Qualification Standards of the American Academy of Actuaries. All three, Mr. White, Ms. Shaw and Mr. Ward are experienced in performing valuations for large public retirement systems.

Please see the following page for additional disclosures required by Actuarial Standards of Practice.

We are available to answer any questions you may have and to provide additional details as may be appropriate.

Sincerely, Gabriel, Roeder, Smith & Company

Lewis Ward Janie Shaw, ASA, EA, MAAA Consultant Consultant

Daniel J. White, FSA, EA, MAAA Senior Consultant

Retirement Plan for DPS Covered Employees of Dallas/Fort Worth International Airport Board

Actuarial Standards of Practice Disclosure Statements

Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors 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 or additional cost or contribution requirements based on the plan’s funded status); and changes in plan provisions or applicable law.

The funded status alone is not appropriate for assessing the need for or the amount of future contributions and is not appropriate for assessing the sufficiency of plan assets to cover the estimated cost of settling the plan’s benefit obligations.

This report should not be relied on for any purpose other than the purpose described above.

Determinations of the financial results associated with the benefits described in this report in a manner other than the intended purpose may produce significantly different results.

The valuation was based upon information furnished by the Airport’s pension plan administrator and the Airport’s administrative staff, concerning the Plan’s benefits, financial transactions, plan provisions and active members, terminated members, retirees and beneficiaries. We checked for internal and year-to-year consistency, but did not otherwise audit the data. We are not responsible for the accuracy or completeness of the information provided by the Airport’s administrative staff.

The developed findings included in this report consider data and other information through January 1, 2025.

This report was prepared using our proprietary valuation model and related software which in our professional judgment has the capability to provide results that are consistent with the purposes of the valuation and has no material limitations or known weaknesses. We performed tests to ensure that the model reasonably represents that which is intended to be modeled.

Table of Contents

Page

Section A Executive Summary ............................................................................................................. 1-2

Section B Introduction

Section C Actuarial Calculations and Funding Status

Section D Analysis of Changes

Section E Benefit Provisions

Section F Actuarial Assumptions and Methods

Section G Fund Assets

Section H Membership Data

Section I Assessment and Disclosure of Risk Associated with Measuring Pension Obligations and Determining Pension Plan Contributions

Section J Tables

Section A

Executive Summary

The unfunded actuarial accrued liability (UAAL) for this plan is $59.9 million as of January 1, 2025 compared to $46.8 million last year. The funded ratio -- the actuarial value of assets divided by the actuarial accrued liability -- is 83.2% compared to 85.8% as of the last valuation.

The primary changes in the UAAL (resulting in a net increase) are shown below:

• There was a total loss of $8.6 million due to liability experience (increase).

• The continued recognition of the shortfall in investment income from 2022 produced a loss on the Actuarial Value of Assets of $0.9 million (increase).

• The Airport contributed an additional $2.1 million above the actuarially determined contribution (decrease).

• $7.4 million was transferred from the DPS Plan to the Employees Plan. This was a reimbursement to the General Employees Plan of benefits owed to DPS employees that were inadvertently paid with Employee Plan’s assets (increase).

As you are aware, the DPS plan is financed using a level percentage of payroll. As a result, the amortization of the UAAL is determined on a level percent of pay basis (increasing dollar payments over the remaining amortization period). Therefore, if there are no actuarial gains or losses, the dollar contribution amount to amortize the UAAL would be expected to increase by 3.5% (payroll growth rate) each year until the 2020 UAAL layer is fully amortized.

Membership

• Number of

- Active Members 390 379

- Retirees and Beneficiaries 261 248

- Inactive, Vested 53 52

- Total 704 679

• Payroll $41.3 million $37.4 million

Member contribution rate 7.00% 7.00%

Assets

• Market value $294.8 million $278.5 million

• Actuarial value $295.9 million $283.4 million

• Return on market value 8.0% 9.8%

• Return on actuarial value 6.5% 5.9%

• Employer contributions $13.7 million $10.3 million

• External cash flow % -2.0% -0.2%

2024Item 2025

Section A

Executive Summary

Actuarial Information

• Normal cost % ( total employee + employer) 22.61% 22.57%

• Accrued Liability $355.8 million $330.2 million

• Unfunded actuarial accrued liability (UAAL) $59.9 million $46.8 million

• Funded ratio 83.2% 85.8%

Change in UAAL

• Asset experience gains/(losses) (892,323)$ (3,272,336)$

• Liability experience gains/(losses) (8,609,292) (3,761,373)

• Assumption changes - -

• Method changes - -

• Plan changes - -

• Additional contributions1 (5,283,250) -

• Administrative expenses different than assumed (277,099) (25,792)

• Expected decrease/(increase) 1,957,434 1,497,885

• Total decrease/(increase) (13,104,530)$ (5,561,616)$

Contribution Information

• Actuarially Determined Contribution 13,788,242$ 11,605,578$

• As Percentage of Covered Payroll 33.37% 31.04%

Change in Actuarially Determined Contribution

• Asset experience gains/(losses) (96,255) (349,181)

• Liability experience gains/(losses)

(928,682) (401,365)

• Assumption Changes - -

• Method Changes - -

• Plan Changes - -

• Additional contributions (572,654) -

• Administrative expenses different than assumed (29,891) (2,752)

• Expected decrease/(increase)

(555,182) (513,460)

• Total decrease/(increase) (2,182,664)$ (1,266,758)$

1Additional contributions of $2.1 milion and a $7.4 million transfer to the General Employees Plan.

Normal cost and amortization payment are expected to grow at the payroll growth rate.

Also includes impact of payroll growing faster/slower than assumed.

Item 2025 2024

Section B

Introduction

The results of the January 1, 2025 actuarial valuation of the Retirement Plan for DPS Covered Employees of Dallas/Fort Worth International Airport Board (the Plan) are presented in this report.

The purpose of any actuarial valuation report is to describe the financial condition of the Plan, to determine the employer’s contribution for the upcoming fiscal year, and to analyze changes in the funding requirements.

Section C discusses the determination of the current funding requirements and funding periods. Section D analyzes the changes in (i) the unfunded actuarial accrued liability and (ii) the contribution requirement.

This section also discusses the gains and losses resulting from differences between actual experience and the actuarial assumptions.

Sections E through H discuss background information used in the preparation of this report--benefit provisions, actuarial assumptions and methods, financial information, and membership data.

Section I discusses and provides analysis of certain risk measures associated with the measurement of pension plan liabilities and contributions.

All of the tables referenced by the other sections appear in Section J.

Section C

Actuarial Calculations and Funding Status

Tables 1a and 1b show the development of the Plan's liabilities and costs.

The Entry Age Normal funding method is used to allocate the actuarial present value of future benefits between the portion due for the current year (the normal cost), prior years (the actuarial accrued liability) and future years (present value of future normal cost). Under this cost method, the current and future normal costs are determined as a level percentage of pay. As of this valuation date, the total normal cost is 22.61% of pay. Since DPS Covered Employees contribute 7% of pay, this means the employer normal cost rate is 15.61% of pay. The actuarial accrued liability is $355.8 million.

The difference between the accrued liability and the actuarial value of assets is the Unfunded Actuarial Accrued Liability (UAAL). The UAAL indicates the value of assets in (excess of)/below the actuarial accrued liabilities. The actuarial value of assets on the valuation date is $295.9 million and therefore the UAAL is $59.9 million.

The Plan’s funded ratio is the ratio of the actuarial value of assets to the actuarial accrued liabilities. This ratio decreased from 85.8% at January 1, 2024 to 83.2% at January 1, 2025.

The contribution amount is determined by combining the normal cost with amortization payments of the UAAL (gain)/loss bases. The UAAL as of January 1, 2020 was the initial UAAL (gain)/loss base and is being amortized over 15 years from January 1, 2020. In each subsequent valuation, a new UAAL gain/loss base is created with its own 15-year amortization period. In other words, the base set up as of January 1, 2020 was amortized over 15 years and has 10 years remaining at January 1, 2025. The base set up as of January 1, 2021 was amortized over 15 years and has 11 years remaining at January 1, 2025. The base set up for the current year as of January 1, 2025 has 15 years remaining as of the valuation date. As shown in Table 1a, the contribution amount necessary to meet the Board’s funding policy is $13.8 million, an increase from the prior year amount of $11.6 million. It should be noted that if there are no actuarial gains or losses, the contribution is expected to increase as a dollar amount year over year, until the January 1, 2020 liability layer is paid off, because the contributions are designed to be level as a percentage of payroll and payroll is expected to grow each year.

Page 14 of this report shows a short-term projection of the contribution requirements under different future investment experience. As shown on the table, if the Plan exactly meets its investment return assumption (on a market value of assets basis) then the dollar amounts of the contributions are expected to increase each year. As described above, because we Plan is using level percentage of payroll financing, the dollar amounts of contributions are expected to increase until at least 2035 at which point the original liability layer from 2020 will be paid off.

Table 1b shows the determination of the amortization payment on the UAAL. As shown on the table, a new loss layer was added in 2025. This represents the difference between the actual UAAL and the remaining balances of prior year layers. The experience losses on assets and liabilities and the asset transfer from the DPS Plan to the General Employees Plan more than offset the additional Airport contribution.

Section D

Analysis of Changes

Table 9 shows the detailed calculation of the asset gain/(loss), while Table 10 shows the development of the liability gain/(loss). (The gains and losses are due to differences between actual experience and anticipated experience determined using the actuarial assumptions.) Table 11 provides a breakout of the liability gain/(loss) by source (e.g. salary loss, retiree mortality loss, etc.).

The unfunded actuarial accrued liability (UAAL) for this plan is $59.9 million as of January 1, 2025 compared to $46.8 million last year. The funded ratio -- the actuarial value of assets divided by the actuarial accrued liability -- is 83.2% compared to 85.8% as of the last valuation. The primary changes in the UAAL during the year were due to the following causes:

• The fund’s return on the actuarial value of assets was 6.5%, compared to the 7.00% investment return assumption. (This is a smoothed return; the dollar-weighted market return was 8.0%. This may differ from the time-weighted return published by the Board.) The resulting net actuarial loss on the actuarial value of assets increased the UAAL by about $0.9 million.

• There was a liability experience loss of approximately $8.6 million.

• An additional contribution by the Airport of $4.4 million above the actuarially determined contribution.

• An asset transfer from to the General Employees plan of $7.4 million. This transfer represented a reimbursement of refunds inadvertently paid to former DPS employees from the Employees plan.

The Board’s funding policy is to contribute the amount needed to pay for the plan’s normal cost and the net amortization payment of the UAAL (gain)/loss bases. The contribution is $13.8 million, approximately $2.2 million more than the prior valuation. The $13.8 million contribution is 33.37% of the covered payroll as of January 1, 2025.

As shown on the Executive Summary, the contribution amount was actually expected to increase because the contribution is determined as a percentage of payroll which is assumed to increase year over year.

However, the contribution actually increased more than expected due to the unfavorable experience and the asset transfer.

Section E

Benefit Provisions

This valuation reflects benefits promised to members by the Plan. There are no ancillary benefits – retirement-type benefits not required by the Plan but which might be deemed a Plan liability if continued beyond the availability of funding by the current funding source. Please see Table 19 for a summary of the provisions of the Plan used in this valuation.

There were no changes in benefit provisions since the last valuation.

Section F

Actuarial Assumptions and Methods

In determining costs and liabilities, actuaries use assumptions about the future, such as rates of salary increase, probabilities of retirement, termination, death and disability, and an investment return assumption. The Board adopts the assumptions and methods to be used, taking into account the actuary's recommendations. An experience study was performed in 2021 for the period ending on December 31, 2020. This report (and the prior year’s report) is based upon the set of actuarial assumptions and methods recommended in the experience study and adopted by the Board in March of 2022. Please see the 2021 Experience Study report for a complete description of the assumptions and the justification for those assumptions.

The most significant assumptions are (i) the assumed investment return, set at 7.00%, (ii) the assumption regarding future salary increases, which is a graded rate from 11.25% to 3.50% based on years of service with the Airport and (iii) post-retirement mortality tables which use Gender-distinct Pub-2010, Amount- Weighted, Public Safety, Healthy Retiree tables. The rates are projected on a fully generational basis by the long-term rates of scale MP 2020 to account for future mortality improvements.

In addition to the actuarial assumptions, the actuary also makes use of an actuarial funding method to allocate costs to past, current and future years of service. The Plan continues to use the Entry Age Normal Method. Under this method, the actuarial present value of benefits is allocated between the portion due for the current year (the normal cost), prior years (the actuarial accrued liability) and future years (present value of future normal cost). We believe this method is appropriate for this Plan.

The actuarial assumptions and methods are summarized in Table 18. There have been no changes to the actuarial assumptions and methods since the prior valuation.

The comprehensive review (Experience Investigation) of the actuarial assumptions is performed every five years, so the next study would be expected to occur in 2026.

Section G

Fund Assets

Plan assets are held in trust. Asset information used in this valuation has been provided by the Airport’s administrative staff. Section I contains several tables which summarize, reconcile or analyze this information.

Table 5 presents a summary of the market value of assets held by the fund. Table 6 shows a reconciliation of the assets from the beginning of the prior year to the valuation date.

Table 7 shows the development of the investment gains and losses for the current year and the development of the Actuarial Value of Assets. Both the actual and expected returns are computed gross of administrative expenses. An actuarial value is used in order to dampen some of the year-to-year fluctuations which would occur if the market value were used instead. The method will recognize 100% of any gains or losses from current year against prior years’ deferred gains or losses.

Any remaining amount of the current year’s gain or loss is scheduled to be recognized in equal installments over five years. Any remaining prior years’ bases are recognized in equal installments over the remaining period from the date the base was established plus 5 years.

Table 8a shows an estimate of the Plan’s yield for the year. This is shown on (i) the market value of assets (reflecting all realized and unrealized gains and losses), and (ii) the actuarial value of assets.

While the dollar-weighted market yield this year is approximately 8.0%, the yield on the actuarial value is 6.5%. The difference between these is due to the smoothing of actual market return over/(under) the expected market return of 7.00%.

Table 9 determines the asset gain or loss for the year, based on the difference between the actual fund yield and the assumed rate of the prior year 7.00%. The impact of this loss has already been discussed in Section D.

Table 12 shows a history of cash flows to the trust. Table 13 shows a projection of the expected benefit payments from the trust over the next twenty plan years, based on the plan’s actuarial assumptions.

Section H

Membership Data

Membership data was provided in electronic data files sent by the Airport’s pension plan administrator. Data for active members includes sex, birth date, date of hire, salary (for the prior year) and accumulated contributions. Data for inactive, non-retired members was similar, but also includes the members' unreduced benefits. For retired members, data includes status (service retiree, disabled retiree or beneficiary), gender, birth date, pension amount, form of payment, beneficiary sex and birth date if applicable, and date of retirement.

While not verifying the correctness of the data at the source, during the valuation process, various tests were performed to ensure the internal consistency of the data and its overall reasonableness.

Membership statistics are summarized in Table 3. Table 4 summarizes certain active member data, and the age/service distribution of active members is shown in Table 14.

Payroll increased by 10.5% since last year. The payroll is assumed to increase at 3.50% each year.

The larger than expected increase was primarily due to larger than expected salary increases for continuing active employees. For all comparative purposes, payroll is the annual rate of pay as of the valuation date for covered employees, as supplied by the Airport’s pension plan administrator. Pay is assumed to change only at the end of a plan year.

Section I

Retirement Plan for Employees of Dallas/Fort Worth

Assessment and Disclosure of Risk Associated with Measuring Pension Obligations and Determining Pension Plan Contributions

The determination of the accrued liability and an actuarially determined contribution requires the use of assumptions regarding future economic and demographic experience. Risk measures, as illustrated in this report, are intended to aid in the understanding of the effects of future experience differing from the assumptions used in the course of the actuarial valuation. Risk measures may also help with illustrating the potential volatility in the accrued liability and an actuarially determined contribution that result from the differences between actual experience and the actuarial assumptions.

Future actuarial measurements may differ significantly from the current measurements presented in this report due to such factors as the following: plan experience differing from that anticipated by the economic or demographic assumptions; changes in economic or demographic assumptions due to changing conditions; 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, or additional cost or contribution requirements based on the Plan’s funded status); and changes in plan provisions or applicable law. The scope of an actuarial valuation does not include an analysis of the potential range of such future measurements.

Examples of risk that may reasonably be anticipated to significantly affect the plan’s future financial condition include:

1. Investment risk – actual investment returns may differ from the expected returns;

2. Asset/Liability mismatch – changes in asset values may not match changes in liabilities, thereby altering the gap between the accrued liability and assets and consequently altering the funded status and contribution requirements;

3. Contribution risk – actual contributions may differ from expected future contributions. For example, actual contributions may not be made in accordance with the plan’s funding policy or material changes may occur in the anticipated number of covered employees, covered payroll, or other relevant contribution base;

4. Salary and Payroll risk – actual salaries and total payroll may differ from expected, resulting in actual future accrued liability and contributions differing from expected;

5. Longevity risk – members may live longer or shorter than expected and receive pensions for a period of time other than assumed;

6. Other demographic risks – members may terminate, retire or become disabled at times or with benefits other than assumed resulting in actual future accrued liability and contributions differing from expected.

(continued)

The effects of certain trends in experience can generally be anticipated. For example if the investment return since the most recent actuarial valuation is less (or more) than the assumed rate, the cost of the plan can be expected to increase (or decrease). Likewise if longevity is improving (or worsening), increases (or decreases) in cost can be anticipated.

The Funding Policy Employer Contribution amount shown on the Executive Summary may be considered as a minimum contribution amount that complies with the Board’s funding policy. The timely receipt of the actuarially determined contributions is critical to support the financial health of the plan. Users of this report should be aware that contributions made at the actuarially determined rate do not necessarily guarantee benefit security.

PLAN MATURITY MEASURES

Risks facing a pension plan evolve over time. A young plan with virtually no investments and paying few benefits may experience little investment risk. An older plan with a large number of members in pay status and a significant trust may be much more exposed to investment risk. Several generally accepted plan maturity measures are described below and are followed by a table showing a 10-year history of these plan maturity measurements for the Plan.

RATIO OF MARKET VALUE OF ASSETS TO PAYROLL

The relationship between assets and payroll is a useful indicator of the potential volatility of contributions.

For example, if the market value of assets is 2.0 times the payroll, a return on assets 5% different than assumed would equal 10% of payroll. A higher/(lower) or increasing/(decreasing) level of this maturity measure generally indicates a higher/(lower) or increasing/(decreasing) volatility in plan sponsor contributions as a percentage of payroll.

RATIO OF ACTUARIAL ACCRUED LIABILITY TO PAYROLL

The relationship between actuarial accrued liability and payroll is a useful indicator of the potential volatility of contributions as a percentage of payroll for a fully funded plan. However, since this plan is closed to new members, this ratio by itself will provide very little usefulness because the ratio will grow very large as the payroll decreases. Of more use is the comparison of the trend in the ratio of liability to payroll. A funding policy that targets a funded ratio of 100% is expected to result in these ratios converging over time.

(continued)

The ratio of liability to payroll may also be used as a measure of sensitivity of the liability itself. For example, if the actuarial accrued liability is 2.5 times the payroll, a change in liability 2% other than assumed would equal 5% of payroll. A higher/(lower) or increasing/(decreasing) level of this maturity measure generally indicates a higher/(lower) or increasing /(decreasing) volatility in liability (and also plan sponsor contributions) as a percentage of payroll.

RATIO OF ACTIVES TO RETIREES AND BENEFICIARIES

A young plan with many active members and few retirees will have a high ratio of active to retirees. A mature open plan may have close to the same number of actives to retirees resulting in a ratio near 1.0. A super-mature or closed plan may have significantly more retirees than actives resulting in a ratio below 1.0.

RATIO OF NET CASH FLOW TO MARKET VALUE OF ASSETS

A positive net cash flow means contributions exceed benefits and expenses. A negative cash flow means existing funds are being used to make payments. A certain amount of negative net cash flow is generally expected to occur when benefits are prefunded through a qualified trust. Large negative net cash flows as a percent of assets may indicate a super-mature plan or a need for additional contributions.

DURATION OF ACTUARIAL ACCRUED LIABILITY

The duration of the actuarial accrued liability may be used to approximate the sensitivity to a 1% change in the assumed rate of return. For example, duration of 10 indicates that the liability would increase approximately 10% if the assumed rate of return were lowered 1%.

ADDITIONAL RISK ASSESSMENT

Additional assessment may include scenario tests, sensitivity tests, stochastic modeling, stress tests, and a comparison of the present value of accrued benefits at low-risk discount rates with the actuarial accrued liability. While a robust measurement of additional risk assessment is outside the scope of the annual actuarial valuation, we have shown a scenario test of the impact of lower future investment returns on the required contributions later in this section.

Assessment and Disclosure of Risk Associated with Measuring Pension Obligations and Determining Pension Plan Contributions (continued)

2025 2024 2023 2022 2021 2020 2019 2018 2017 2016

Ratio of the market value of assets to payroll1 7.14 7.45 7.40 8.28 6.86 6.40 5.91 6.16 5.78 5.44

Ratio of actuarial accrued liability to payroll1 8.61 8.83 9.01 8.86 8.08 7.79 7.80 7.72 7.81 7.57

Ratio of actives to retirees and beneficiaries 1.49 1.53 1.53 1.62 1.84 1.95 1.96 2.03 2.03 2.27

Ratio of net cash flow to market value of assets -2.0% -0.2% -0.2% 0.4% 1.1% 1.8% 1.8% 1.5% 1.8% 1.6%

Duration of the actuarial accrued liability2

17.56 17.38 17.33 17.38 18.07 18.33 18.31 NA NA NA

1Payroll is covered payroll of the plan

2Duration measure not available prior to 2019

Retirement Plan for Employees of Dallas/Fort Worth

Assessment and Disclosure of Risk Associated with Measuring Pension Obligations and Determining Pension Plan Contributions (continued)

$8.0

$10.0

$12.0

$14.0

$16.0

$18.0

$20.0

$22.0

2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Impact of Investment Return Performance on Projected Employer Contribution Requirements ($ in Millions)

7.50% 7.00% 6.50% 6.00%Projected Investment Return Performance:

Low-Default-Risk Obligation Measure

Actuarial Standards of Practice No. 4 (ASOP No. 4) was revised and reissued in December 2021 by the

Actuarial Standards Board (ASB). It includes a new calculation called a low-default-risk obligation measure

(LDROM) to be prepared and issued annually for defined benefit pension plans. The transmittal memorandum for ASOP No. 4 includes the following explanation:

“The ASB believes that the calculation and disclosure of this measure provides appropriate, useful information for the intended user regarding the funded status of a pension plan. The calculation and disclosure of this additional measure is not intended to suggest that this is the “right” liability measure for a pension plan. However, the ASB does believe that this additional disclosure provides a more complete assessment of a plan’s funded status and provides additional information regarding the security of benefits that members have earned as of the measurement date.”

The LDROM estimates the amount of money the plan would need to invest in low risk securities to provide the benefits with greater certainty. The current model expects lower costs but with higher investment risk, which creates less certainty and a possibility of higher costs. Thus, the difference between the two measures (Valuation and LDROM) is one illustration of the possible costs the sponsor could incur if there was a reduction in the investment risk in comparison to the current diversified portfolio. However, the downside risk would be limited in the scenarios where the current portfolio would fail to achieve returns in excess of the low-default-risk discount, in this case 5.49%.

The following information has been prepared in compliance with this new requirement. Unless otherwise noted, the measurement date, actuarial cost methods, and assumptions used are the same as for the funding valuation covered in this actuarial valuation report.

Valuation Accrued Liability LDROM

$355,831,067 $437,718,201

Again, the difference between the two measures, or $81,887,134, is one illustration of the savings the sponsor anticipates by assuming investment risk in a diversified portfolio.

Disclosures: Discount rate used to calculate LDROM: 5.49% Intermediate FTSE Pension Discount Curve as of December 31, 2024. This measure may not be appropriate for assessing the need for or amount of future contributions as the current portfolio is expected to generate significantly more investment earnings than the low-default-risk portfolio. This measure is also not appropriate for assessing the sufficiency of plan assets to cover the estimated cost of settling the plan’s benefit obligation as this measure includes projections of salary increases and the ability for current members to continue to accrue eligibility and vesting service.

Section J

Tables

Page

Table 1a Development of Employer Cost

Table 1b Summary of Amortization Bases

Table 2 Schedule of Funding Progress

Table 3 Membership Data

Table 4 Historical Summary of Active Member Data

Table 5 Plan Net Assets

Table 6 Reconciliation of Plan Net Assets

Table 7 Development of Actuarial Value of Assets

Table 8a Estimation of Yields

Table 8b History of Investment Return Rates

Table 9 Investment Experience Gain or Loss

Table 10 Total Experience Gain or Loss

Table 11 Source of Liability Gains and Losses

Table 12 History of Cash Flow

Table 13 Projection of Estimated Benefit Payments

Table 14 Distribution of Active Members by Age and Service

Table 15 Retiree Benefits by Form of Payment

Table 16 Retiree Benefits by Benefit Start Year

Table 17 Summary of Changes in Membership Status

Table 18 Summary of Actuarial Assumptions and Methods

Table 19 Summary of Benefit Provisions

Table 1a

January 1, 2025 January 1, 2024

(1) (2)

1. Payroll 41,318,269$ 37,388,022$

2. Present value of future benefits

a. Active members 253,575,674$ 229,337,027$

b. Retirees and beneficiaries 190,131,009 180,030,731

c. Deferred vested 7,198,124 6,302,855

d. Total 450,904,807$ 415,670,613$

3. Total actuarial accrued liability for:

a. Active members 158,501,934$ 143,818,056$

b. Retirees and beneficiaries 190,131,009 180,030,731

c. Deferred vested members 7,198,124 6,302,855

d. Total 355,831,067$ 330,151,642$

4. Actuarial value of assets 295,940,822$ 283,365,927$

5. Unfunded actuarial accrued liability (UAAL) (Item 3d - Item 4) 59,890,245$ 46,785,715$

6. Normal cost rate

a. Total 22.61% 22.57%

b. Member contribution rate 7.00% 7.00%

c. Board normal cost rate 15.61% 15.57%

7. Board Normal Cost (middle of year) 6,449,782$ 5,821,315$

8. Administrative Expense (middle of year) 419,000$ 404,000$

9. Actuarially Determined Contribution

a. Board Normal Cost (end of year) 6,671,706$ 6,021,615$

b. Administrative Expense (end of year) 433,417 417,901$

c. Amortization Payment (end of year) 6,683,119 5,166,062

d. Total 13,788,242$ 11,605,578$

10. Contribution as percent of covered payroll 33.37% 31.04%

Development of Employer Cost

Table 1b

Bases Initial Amount

Remaining

Balance as of

January 1, 2025

Amortization

Payment1

Years Remaining as of January 1, 1/1/2020 UAAL as of January 1, 2020 49,148,757$ 42,394,804$ 5,244,598$ 10

1/1/2021 2021 New Liability Layer (6,396,636) (5,758,147) (657,797) 11

1/1/2022 2022 New Liability Layer (3,879,783) (3,603,860) (383,311) 12

1/1/2023 2023 New Liability Layer 5,157,346 4,937,257 492,300 13

1/1/2024 2024 New Liability Layer 7,059,501 6,924,600 651,084 14

1/1/2025 2025 New Liability Layer 14,995,591 14,995,591 1,336,245 15

Total 59,890,245$ 6,683,119$

Average Weighted Funding Period 11.3

1 Assuming payment made at the end of the year.

Summary of Amortization Bases

Date

Established

Table 2

Unfunded Actuarial

Valuation Actuarial Value of Accrued Liability Funded Ratio Annual Covered UAAL as % of

Date Assets (AVA) (UAAL) (3) - (2) (2)/(3) Payroll Payroll (4)/(6)

(1) (2) (4) (5) (6) (7)

January 1, 2006

61,045,216$ 100,053,755$ 39,008,539$ 61.0% 18,721,786$ 208.4%

January 1, 2007 69,915,301 106,985,517 37,070,216 65.4% 19,284,803 192.2%

January 1, 2008 80,482,746 116,431,289 35,948,543 69.1% 20,129,837 178.6%

January 1, 2009 85,047,550 125,563,395 40,515,845 67.7% 21,388,133 189.4%

January 1, 2010 90,215,786 130,852,905 40,637,119 68.9% 22,178,727 183.2%

January 1, 2011

98,340,734 146,158,466 47,817,732 67.3% 23,785,728 201.0%

January 1, 2012 104,620,612 156,221,800 51,601,188 67.0% 23,900,023 215.9%

January 1, 2013 111,365,683 165,805,345 54,439,662 67.2% 24,583,346 221.4%

January 1, 2014 126,911,130 175,332,225 48,421,095 72.4% 25,291,986 191.4%

January 1, 2015 142,225,564 186,832,983 44,607,419 76.1% 26,191,975 170.3%

January 1, 2016 1 152,273,098 203,482,590 51,209,492 74.8% 26,882,864 190.5%

January 1, 2017 164,361,976 217,410,950 53,048,974 75.6% 27,839,817 190.6%

January 1, 2018 179,918,008 231,565,173 51,647,165 77.7% 30,005,902 172.1%

January 1, 2019 194,887,387 248,170,608 53,283,221 78.5% 31,819,709 167.5%

January 1, 2020 212,881,725 262,030,482 49,148,757 81.2% 33,639,251 146.1%

January 1, 2021 231,066,434 272,994,205 41,927,771 84.6% 33,802,073 124.0%

January 1, 2022

253,346,612 290,597,136 37,250,524 87.2% 32,790,767 113.6%

January 1, 2023 268,195,314 309,419,413 41,224,099 86.7% 34,360,807 120.0%

January 1, 2024 283,365,927 330,151,642 46,785,715 85.8% 37,388,022 125.1%

January 1, 2025 295,940,822 355,831,067 59,890,245 83.2% 41,318,269 144.9%

Change in actuarial assumptions

(3)

Schedule of Funding Progress

Actuarial Accrued

Liability (AAL)

Table 3

1. Active members

a. Number 390 379

b. Total payroll 41,318,269$ 37,388,022$

c. Average salary 105,944$ 98,649$

d. Average age 42.2 42.4

e. Average service 12.0 12.0

2. Service retirees

a. Number 225 216

b. Total annual benefits 13,726,825$ 12,941,755$

c. Average annual benefit 61,008$ 59,916$

3. Disabled retirees

a. Number 4 4

b. Total annual benefits 187,331$ 182,762$

c. Average annual benefit 46,833$ 45,691$

4. Beneficiaries

a. Number 32 28

b. Total annual benefits 694,159$ 599,395$

c. Average annual benefit 21,692$ 21,407$

5. Vested deferred members

a. Number 53 52

b. Total annual deferred benefits 987,224$ 985,177$

c. Average annual deferred benefit 18,627$ 18,946$

1 Includes vested terminated and disabled participants on long-term disability and excludes alternate payees of active and vested deferred members who are currently not in payment status.

Membership Data

Table 4

Year Beginning Percent Amount in Percent Percent Average Average

January 1, Number Increase $ Millions Increase $ Amount Increase Age Service

(1) (2) (3) (4) (5) (6) (7) (8) (9)

2006 299 3.7% 18.7 4.7% 62,615 1.3% 42.4 13.1

2007 305 2.0% 19.3 3.0% 63,229 1.0% 42.0 12.3

2008 307 0.7% 20.1 4.4% 65,570 3.7% 42.1 12.3

2009 316 2.9% 21.4 6.3% 67,684 3.2% 41.9 12.0

2010 328 3.8% 22.2 3.7% 67,618 (0.1%) 41.7 11.9

2011 351 7.0% 23.8 7.2% 67,766 0.2% 41.7 11.7

2012 350 (0.3%) 23.9 0.5% 68,286 0.8% 41.9 11.8

2013 354 1.1% 24.6 2.9% 69,444 1.7% 41.9 11.8

2014 349 (1.4%) 25.3 2.9% 72,470 4.4% 42.7 12.5

2015 352 0.9% 26.2 3.6% 74,409 2.7% 42.9 12.7

2016 348 (1.1%) 26.9 2.6% 77,250 3.8% 43.2 12.8

2017 350 0.6% 27.8 3.6% 79,542 3.0% 42.8 12.3

2018 367 4.9% 30.0 7.8% 81,760 2.8% 42.5 11.9

2019 376 2.5% 31.8 6.0% 84,627 3.5% 42.7 12.1

2020 388 3.2% 33.6 5.7% 86,699 2.4% 42.5 12.1

2021 388 0.0% 33.8 0.5% 87,119 0.5% 42.8 12.3

2022 370 (4.6%) 32.8 (3.0%) 88,624 1.7% 42.8 12.3

2023 369 (0.3%) 34.4 4.8% 93,119 5.1% 42.4 12.0

2024 379 2.7% 37.4 8.8% 98,649 5.9% 42.4 12.0

2025 390 2.9% 41.3 10.5% 105,944 7.4% 42.2 12.0

Active Members Covered Payroll Average Salary

Historical Summary of Active Member Data

Table 5

(2) (3)

1. Cash and Cash Equivalents 11,880,484$ 10,733,055$

2. Receivables:

a. Contributions 0$ 2$

b. Interest, dividends and due from broker 322,413 299,140

c. Total receivables 322,413$ 299,142$

3. Investments

a. Domestic Equity 62,941,729$ 54,903,943$

b. International equity 51,949,938 50,470,962

c. Non-core fixed income 47,992,847 38,780,397

d. Private equity 38,040,143 42,457,611

e. Core fixed income 28,987,613 27,980,738

f. Infrastructure 25,897,348 22,824,702

g. Real estate 27,322,360 22,653,338

h. Total investments 283,131,978$ 260,071,692$

4. Total assets 295,334,875$ 271,103,889$

5. Liabilities

a. Administrative fees payable 289,387$ 53,646$

b. Non-current administrative fees payable 0 0

c. Securities purchased, etc. 204,700 0

d. Other payables 0 0

e. Total liabilities 494,087$ 53,646$

6. Adjusted cash -$ -$

7. Total market value of assets available for benefits 294,840,788$ 271,050,243$

(Item 4 - Item 5 + Item 6)

8. Asset allocation (investments)

a. Domestic Equity 22.3% 21.1%

b. International equity 18.3% 19.4%

c. Non-core fixed income 17.0% 14.9%

d. Private equity 13.4% 16.3%

e. Core fixed income 10.2% 10.8%

f. Infrastructure 9.1% 8.8%

g. Real estate 9.7% 8.7%

h. Total investments 100.0% 100.0%

Revised January 1, 2024 Plan Net Assets after prior valuation.

2 Reflects allocation of assets in Item 3. Plan also held cash and cash equivalents equal to

4% of PY 2024 end of year assets and 4% of PY 2023 end of year assets.

Item

(1)

Plan Net Assets

(Assets at Market or Fair Value)

Table 6

December 31, 2024 December 31, 2023

1. Market value of assets at beginning of year

a. Net assets at beginning of year 278,475,842$ 254,312,183$

b. Adjustment1 (7,425,599) 0

c. Adjustment for contribution receivable 0 0 d Trust value of assets at beginning of year 271,050,243$ 254,312,183$

2. Additions for the year

a. Employer contributions paid into trust 13,747,927$ 10,338,820$

b. Employee contributions paid into trust 2,753,949 2,479,203

c. Income

i. Interest, dividends, and other income 5,062,282 4,787,307

ii. Net realized and unrealized gains /(losses) 19,899,578 22,385,113

iii. Investment expenses (2,833,491) (2,328,246)

iv. Net income 22,128,369$ 24,844,174$

d. Total additions 38,630,245$ 37,662,197$

3. Deductions for the year

a. Benefit payments 14,167,818$ 13,083,604$

b. Administrative and miscellaneous expenses 671,882 414,934

c. Total deductions 14,839,700$ 13,498,538$

4. Increase in net assets

(Item 2d - Item 3c) 23,790,545$ 24,163,659$

5. Trust value of assets at end of year

(Item 1d + Item 4) 294,840,788$ 278,475,842$

6. Contributions receiveable at end of year -$ -$

7. Market value of assets at end of year

(Item 5 + Item 6) 294,840,788$ 278,475,842$

Transfer of assets to Gen EES plan for prior years' DPS Plan refunds paid out of Gen EES Plan.

Reconciliation of Plan Net Assets

Year Ending

Table 7

January 1, 2025

1. Market value of assets at beginning of year 278,475,842$

2. Net new investments

a. Employer Contributions 13,747,927$

b. Employee Contributions 2,753,949

c. Benefits and refunds paid

(21,593,417)

d. Administrative and miscellaneous expenses (671,882)

e. Subtotal (5,763,423)

3. Assumed investment return rate for fiscal year 7.00%

4. Assumed investment income for fiscal year (reflects timing of contributions) 18,888,335$

5. Expected Market Value at end of year (1+ 2 + 4) 291,600,754$

6. Market value of assets at end of year 294,840,788$

7. Difference (6 - 5) 3,240,034$

8.

Fiscal

Year End

Remaining Deferrals of

Excess (Shortfall) of

Investment Income

Offsetting of

Gains/(Losses)

Net Deferrals

Remaining

Years

Remaining

Recognized for this valuation

Remaining after this valuation

(1)

(2)

(3) = (1) + (2) (4) (5) = (3) / (4) (6) = (3) - (5)

2020 0$ 0$ 0$ 1 0$ 0$

2021 0 0 0 2 0 0

2022 (4,890,085) 3,240,034 (1,650,051) 3 (550,017) (1,100,034)

2023 0 0 0 4 0 0

2024 3,240,034 (3,240,034) 0 5 0 0

Total (1,650,051)$ 0$ (1,650,051)$ (550,017)$ (1,100,034)$

9. Final actuarial value of plan net assets, end of year (Item 6 - Item 8, Column 6) 295,940,822$

10. Ratio of actuarial value to market value 100.4%

1Includes $7.4 million transfer from DPS plan to Employees Plan (repayment of refunded contributions).

Remaining deferrals in Column (1) for prior years are from last year's report Table 7. The number in the current year is Item 7, above.

Column 2 is a direct offset of the current year's excess/(shortfall) return against prior years' excess/(shortfall) of the opposite sign.

Development of amounts to be recognized as of December 31, 2024:

Development of Actuarial Value of Assets

Table 8a

Estimation of Yields

Year Ending

December 31, 2024

A. Market value yield

1. Beginning market assets 278,475,842$

2. Investment income (including realized and unrealized gains and losses)

a. Interest and dividends net of investment expenses 2,228,791$

b. Realized and unrealized gains/(losses) 19,899,578

c. Total investment income based on market value 22,128,369$

3. End of year market assets 294,840,788$

4. Estimated dollar weighted market value yield 8.0%

B. Actuarial value yield

1. Beginning of year actuarial assets 283,365,927$

2. Actuarial return 18,338,318$

3. End of year actuarial assets 295,940,822$

4. Estimated actuarial value yield 6.5%

Table 8b

Plan Year Ending

December 31, Market Actuarial

(1) (2) (3)

2005 3.6% 5.7%

2006 7.8% 6.2%

2007 8.6% 8.2%

2008 -23.6% 1.1%

2009 19.4% 1.3%

2010 12.3% 4.0%

2011 1.1% 3.1%

2012 10.4% 3.7%

2013 15.7% 10.7%

2014 4.4% 8.8%

2015 -1.1% 5.3%

2016 8.0% 6.0%

2017 13.0% 7.7%

2018 -0.1% 6.3%

2019 12.3% 7.2%

2020 6.5% 7.3%

2021 16.6% 9.2%

2022 -6.2% 6.0%

2023 9.8% 5.9%

2024 8.0% 6.5%

6.7% 7.0%

6.5% 6.7%

5.6% 5.7%

History of Investment Return Rates

Five-year Average Return

Ten-year Average Return

Twenty-year Average Return

Table 9

Valuation as of

(2)

1. Actuarial assets, beginning of current year 283,365,927$

2. Contributions (employee + employer)1 16,501,876$

3. Benefits and refunds paid with administrative expenses2 (22,265,299)$

4. Assumed net investment income at 7.00% on

a. Beginning of year assets 19,835,615$

b. Contributions3 161,131

c. Benefits and refunds paid with administrative expenses (766,105)

d. Total 19,230,641$

5. Expected actuarial assets, end of current year

(Sum of Items 1 through 4) 296,833,145$

6. Actual actuarial assets, end of current year 295,940,822$

7. Asset experience gain/(loss) for year (892,323)$

Addtional contributions of $2.1 million

2 Includes $7.4 million transfer from DPS plan to Gen EEs plan for prior years' refunds paid out of Gen EES Plan 3 Based on actual timing of…