Friday, November 23, 2018

New York City - CAFR - FY-2018 - NYCERS Financials

Every Halloween New York City releases its Comprehensive Annual Financial Report (CAFR). This year was no exception. The report is a very dry document but full real information. You need to be a little skeptical but generally it is accurate within the guidelines of accounting practice.

The report in particular includes financial reports for the five city retirement systems. That is why I am always interested in the release. Around the the New Year each individual system releases its own CAFR but the City CAFR is the first look at how the five funds performed for the year.

NYCERS opened the year (7/1/2017) with assets worth $61.3B and closed the year with a balance of $65.2B. That is a $3.9B (6.36%) increase.

For FY-2018 the S&P 500 index opened at 2423.4 and closed at 2718.37, a 12.17% increase.

During FY-2018 NYCERS received:

  1. $ 523.5M - contributions from members
  2. $ 3,377.0M - contributions from employers
  3. $ 878.6M - interest income
  4. $ 897.9M - dividend income
  5. $ 27.1M - securities lending income
  6. $ 3.4M - other income

During FY-2018 NYCERS paid out:

  1. $ 4,882.6M - benefits and withdrawals
  2. $ 9.1M - transfers to other retirement systems
  3. $ 10.9M - payments to VSF (Transit&Housing Police)
  4. $ 205.0M - payments to VSF - Correction Force
  5. $ 241.8M - investment expenses
  6. $ 59.7M - NYCERS operating expenses

The end result is that NYCERS had a positive income flow of $289.4M and an asset increase of $3,889.97M for the year. The $289.4 inflow reduced the rate of return for the year from 6.36% to 5.85%.

The NYCERS actuary reported in her FY-2018 GASB report (Appendix A page 4) that NYCERS has 33% of its assets in fixed income (bonds) and 67% in equities (stocks&real estate).

The key question when analyzing NYCERS's annual rate of return is whether it is above or below market expectations. NYCERS never answers this question. It just reports the numbers as if they are acceptable