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CITY OF SAN LEANDRO <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />For The Year Ended June 30, 2016 <br /> <br /> <br />NOTE 13 – PENSION PLAN (Continued) <br /> <br />Contributions – Section 20814(c) of the California Public Employees’ Retirement Law requires that the <br />employer contribution rates for all public employers be determined on an annual basis by the actuary and <br />shall be effective on the July 1 following notice of a change in the rate. Funding contributions for both <br />Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined <br />rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, <br />with an additional amount to finance any unfunded accrued liability. The City is required to contribute the <br />difference between the actuarially determined rate and the contribution rate of employees. <br /> <br />For the year ended June 30, 2016, the contributions recognized as part of pension expense for the Plan <br />were as follows: <br /> <br />Miscellaneous Safety Total <br />Contributions - employer 4,860,237$ 5,482,854$ 10,343,091$ <br />B. Net Pension Liability <br /> <br />The City’s net pension liability for each Plan is measured as the total pension liability, less the pension <br />plan’s fiduciary net position. The net pension liability of each of the Plan is measured as of June 30, <br />2015, using an annual actuarial valuation as of June 30, 2014 rolled forward to June 30, 2015 using <br />standard update procedures. A summary of principal assumptions and methods used to determine the net <br />pension liability is shown below. <br /> <br />Actuarial Assumptions – The total pension liabilities in the June 30, 2014 actuarial valuations were <br />determined using the following actuarial assumptions: <br /> <br />All Miscellaneous Plans <br />Valuation Date June 30, 2014 <br />Measurement Date June 30, 2015 <br />Actuarial Cost Method Entry-Age Normal Cost Method <br />Actuarial Assumptions: <br />Discount Rate 7.65% <br />Inflation 2.75% <br />Payroll Growth 3.0% <br />Projected Salary Increase 3.2% - 12.2% (1) <br />Investment Rate of Return 7.50% (2) <br />Mortality Derived using CalPERS Membership <br />Data for all Funds (3) <br />(1) Depending on age, service and type of employment <br />(2) Net of pension plan investment expenses, including inflation <br />(3) The probabilities of mortality are based on the 2010 CalPERS Experience Study for the <br />period from 1997 to 2007. Pre-retirement and Post-retirement mortality rates include 5 years <br />of projected mortality improvement using Scale AA published by the Society of Actuaries. <br />75