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4 <br />Notes to the Financial Statements <br />June 30, 2020 <br />Actuarial method and assumptions <br />The total OPEB liability in the June 30, 2019 actuarial valuation was determined using the <br />following actuarial assumptions, applied to all periods included in the measurement, unless <br />otherwise specified: <br />Valuation date <br />Measurement date <br />Actuarial cost method <br />Actuarial assumptions: <br />Discount rate <br />Inflation <br />Projected salary increase <br />Health care trend rates <br />Mortality (2) <br />June 30, 2019 <br />June 30, 2019 <br />Entry age cost <br />6.25% <br />2.26% <br />3.25% <br />Pre -65 and Post -65, 6.90% and <br />4.60%, respectively for 2021, both <br />reducing to 4.25% at 2032 and <br />thereafter <br />Derived using Cal P E RS' valuations <br />(1) Annual increases vary by category, entry age and duration of service. <br />(2) The mortalitytable used was developed based on CalPERS'\raluations. Pre <br />and post retirement used CalPERS Mortality 2017 <br />Discount rate <br />The discount rate used to measure the total OPEB liability was 6.25%. The projection of cash <br />flows used to determine the discount rate assumed that contributions from the employer will <br />be made at statutorily required rates, actuarially determined. The discount rate is based on <br />the PARS moderate investment policy or a yield or index for 20 -year, tax-exempt general <br />obligation municipal bonds with an average rating of AA/Aa or better for benefits not covered <br />by plan assets. <br />Long-term expected rate of return <br />The arithmetic long-term expected real rates of return by asset class for the next 10 years as <br />provided in a report by JP Morgan. For years thereafter, returns were based on historical <br />average index real returns over the last 30 years assuming a similar equity/fixed investment <br />mix and a 2.26% inflation rate. Investment expenses were assumed to be 25 basis points <br />per year. These returns were matched with cash flows for benefits covered by plan assets <br />and the Bond Buyer 20 -Bond General Obligation index was matched with cash flows not <br />covered by plan assets to measure the reasonableness of the choice in discount rate. <br />58 <br />