Note: Uncollected taxes levied prior to the year ended June 30, 1974 were $823,765, $602,783, and $543,635 at June 30, 1974 and 1975, and December 31, 1975, respectively.

*Percentage of appraisal value as set by County officials for the fiscal year June 30, 1974; for the fiscal years ended June 30, 1975 and 1976, the ratio has been established by statute. Revaluation of real property was made by County officials and became effective with the 1971 tax levy.

**Valuation of railroads, telephone companies and other utilities as determined by the State Board of Assessment.

†$8,320,634 of such amount was collected in December, 1975, and has been paid to the City since December 31, 1975.

PENSION PLANS

The City participates in three separate retirement systems or plans: (1) the majority of city employees are included in the City's participating membership in the North Carolina Local Governmental Employees' Retirement System; (2) city firemen are covered by the Charlotte Firemen's Retirement System; and (3) members of the police force belong to the Law Enforcement Officers' Benefit and Retirement Fund.

The Park and Recreation Commission has a separate contributory pension plan. The City is not legally required to fund this plan.

The North Carolina Local Governmental Employees' Retirement System

The North Carolina Local Governmental Employees' Retirement System began operation on July 1, 1945 as a service agency for public employees of counties, cities, towns, boards, commissions and other similar political entities. The State Treasurer is custodian of the system funds. The system is supported by the joint contributions of members and participating employers. The rates of contribution by the participating employers are set on the basis of actuarial valuations made for each participating employer as soon as practicable after one year of participation.

The act establishing this system, Chapter 128, Article 3 of the North Carolina General Statutes, provides that the contributions of the participating employers shall consist of a normal contribution to cover the liability on account of service currently rendered and an accrued liability contribution on account of the liability assumed by each such employer for benefits based on service rendered prior to the date of participation.

The normal contribution rate is to be determined as the uniform percentage of the earnable compensation of the average new entrant throughout his entire period of active service which would be sufficient to provide for the payment of any pension payable on his account and for the pro rata share of the cost of administration of the system. The current normal contribution rate for all employers, including the City, is 3.24 percent of payroll. The accrued liability contribution rate is set for each employer on the basis of prior service credits allowable to the employees thereof determined on the basis of separate initial valuations for each employer.

The system is administered through a Board of Trustees by the State of North Carolina. The administrative costs are borne by participating employers. The State of North Carolina makes no contributions to the system.

The number of governmental units participating in the system on December 31, 1974 was 471, and the number of members, including those retired, on that date was 47,342. The numbers of persons receiving retirement allowances, refunds, and death benefits during 1974 were, respectively, 3,698, 5,435 and 71. The death benefit, effective July 1, 1969, is optional with each unit.

The system provides both retirement and death benefits on an employee and employer contribution basis. Members contribute 5 percent of their individual compensation not in excess of $5,600 and 6 percent of the excess over $5,600. The benefits of the pension system are available to the members at various times throughout their creditable service. An individual is qualified for a vested deferred benefit, when age 60 is reached, after five years of creditable service to the local government. Unreduced benefits are available upon 30 years of creditable service or at age 65. Benefit payments are computed based upon the average annual compensation in the five consecutive years of membership service that produces the highest average. This average final compensation computation is then adjusted by a percentage formula, total years of service factor, and by an age service factor if the individual is not eligible for unreduced benefits.

Following is a cash flow analysis of the system for the three fiscal years of the system ended December 31:

Sources: Books of Accounts as of December 31, 1974; Reports on Audit for all prior years.

Contributions to the system are determined on an actuarial basis by the firm of George B. Buck Consulting Actuaries, Inc. The latest actuarial study was for the period ended December 31, 1974, and included a 41⁄2 percent investment return assumption. As a matter of administrative policy, the unfunded accrued liability of each unit will be funded over a period of 24 years, by an actuarial rate, calculated as of the date the unit joins the system. This rate is to be adjusted annually, if necessary, in accordance with current actuarial determinations.

Summarized below is financial information concerning the system for the three fiscal years of the system ended December 31:

These figures reflect only the aggregate amount of unfunded accrued liability of all units as of December 31 of the year indicated. This total liability is not shared among the units and therefore in no way represents the unfunded accrued liability of a particular member unit.

Sources: Books of Accounts as of December 31, 1974; Reports on Audit for all prior years; and Annual Reports of the Independent Actuary, 1972-1974.

The City joined the system February 1, 1946 and since February 1, 1970 has had no unfunded accrued liability. The actuarially determined contribution rate applicable to the eligible payroll of the City for the 1976 fiscal year is 3.41 percent, which is the sum of the 3.24 percent normal contribution rate and .17 percent optional benefit rate.

Following are the amounts contributed to the system by the City and its participating employees for the three fiscal years of the system ended December 31:

City contributions for the three fiscal years ended June 30, 1973, 1974 and 1975 were $573,682, $687,734 and $622,553, respectively.

Charlotte Firemen's Retirement System

The Charlotte Firemen's Retirement System, established pursuant to Chapter 926 of the Session Laws of the General Assembly of North Carolina of 1975 and administered solely by the City, provides retirement benefits for uniformed members of the Charlotte Fire Department. As of January 1, 1975 the Firemen's system had a membership of 557 active and 78 retired members.

The retirement benefits are available to the members at various times throughout their creditable service beginning at age 50 and 25 years of creditable service, but not later than age 65 or 30 years of creditable service. Benefit amounts are based on years of service and salary during last five years of service. Benefits equal to total contributions paid into the system less any retirement benefits actually received are paid to his beneficiary upon the death of a member.

Following is a cash flow analysis of the system for the three years ended December 31, 1975:

Sources: Annual Audits of the Charlotte Firemen's Retirement System for the fiscal years 1973-1975.

Contributions to the system, which are determined on an actuarial basis by the firm of Tillinghast & Company, Inc., consulting actuaries, include rates that provide for both normal and accrued liability funding. The latest actuarial valuation by independent actuary, based on data as of June 30, 1974, included a 41⁄2 percent annual investment yield assumption. The system is being supported by a matching contribution rate of 10.1 percent that will provide for the annual normal cost, interest on the unfunded accrued liability, and amortization of the principal amount of the unfunded accrued liability over 61 years. In addition, the City is annually contributing for a five-year period $44,500 to the system to fund a special 2 percent benefit adjustment for members retired prior to January 1, 1972.

Summarized below is financial information concerning the system for the three fiscal years ended

June 30, 1975:

Sources: Annual Audits of the Charlotte Firemen's Retirement System for the years 1973-1975; and annual actuarial studies of the system for the years 1973-1975.

Law Enforcement Officers' Benefit and Retirement Fund

The Law Enforcement Officers' Benefit and Retirement Fund is administered by the State of North Carolina pursuant to G.S. 143-166. It had a membership of 7,250 at June 30, 1974 composed primarily of local government law enforcement officers. The system is funded by certain fees collected through the General Court of Justice and by contributions from members and their employers. The City has no liability for any contributions except those paid on behalf of members during each fiscal year. The payments made by the City to the Law Enforcement Officers' Benefit and Retirement Fund during the last three fiscal years ended June 30 were:

The City's contribution to the Park and Recreation Commission Pension Plan is based on actuarial determinations which provide for (1) normal costs; (2) interest on unfunded accrued liability; and (3) amortizations of the principal amount of the unfunded accrued liability of approximately $210,000 over an eighteen year period based on an actuarial determination as of November 1, 1975 by The Bankers Life Company. Park and Recreation Commission General Fund contributions to such plan for the years ended June 30, 1975, 1974, and 1973 were $43,203, $36,104, and $32,662, respectively.

CONTINGENT LIABILITIES

On February 19, 1975, United States Department of Labor ("DOL") auditors met with certain City and Charlotte-Mecklenburg School Board administrative officials for a preliminary audit conference respecting principally audit findings on grants awarded to the City totaling $1,845,941 as prime sponsor and subcontracted to the School Board for operation of a 1975 summer and regular school program and 1974 summer program for employment of economically disadvantaged youth under Titles I and III of the Comprehensive Employment and Training Act of 1973. The auditors indicated their examination disclosed that a substantial number of participants in the programs appeared to be ineligible for employment due to insufficient information in the participants' employment files or because DOL income standards were exceeded. The School Board officials have offered explanations of mitigating circumstances to the auditors; however, the effect of such explanations on the auditor's final findings cannot be determined until a final audit report is prepared, which will be approximately 90 to 120 days. If participants' files can be adequately documented by School Board officials, and if such documentation reveals that such participants were ineligible, and should other audit findings be correct, then DOL could recover such ineligible costs. In such event, it is the opinion of the City Attorney that the School Board would be obligated to reimburse the City for such costs.

LITIGATION

The City is a party defendant in a suit pending in the General Court of Justice, Superior Court Division, Mecklenburg County, North Carolina, which involves a claim by Southern Bell Telephone and Telegraph Company to obtain compensation for adjusting its facilities to accommodate construction of the Charlotte expressway system. The plaintiff has alleged that it has incurred costs approximating