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CITY OF SAN LEANDRO <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />For The Year Ended June 30, 2019 <br /> <br /> <br />NOTE 14 – OTHER POST EMPLOYMENT BENEFITS (Continued) <br /> <br />Employees Covered by Benefit Terms – Membership in the plan consisted of the following at the <br />measurement date of June 30, 2019: <br /> <br />Active employees 336 <br />Inactives currently receiving benefit payments 300 <br />Inactive entitled to but not yet <br />receiving benefit payments - <br />Total 636 <br /> <br />B. Net OPEB Liability <br /> <br />Actuarial Methods and Assumptions – The City’s net OPEB liability was measured as of June 30, 2019 <br />and the total OPEB liability used to calculate the net OPEB liability was determined on actuarial valuation <br />date that was rolled forward using standard update procedures to determine the total OPEB liability as of the <br />measurement date, based on the following actuarial methods and assumptions: <br /> <br />Actuarial Assumptions June 30, 2019 Measurement Date <br />Valuation Date • June 30, 2019 <br />Actuarial Cost Method • Entry Age Normal Level Percentage of Payroll <br />Funding Policy • City contributes full Actuarial Determined Contribution <br />Discount Rate • 5.25 % <br />General Inflation • 2.75% per annum <br />Mortality, Retirement, Disability, <br />Termination • Same as CalPERS <br />Salary Increases • 3.0% <br />• Additional merit-based on CallPERS merit salary increase tables. <br />Healthcare Cost Trend • Non-Medicare - 7.25% for 2021, decreasing to an ultimate rate of 4.0% in 2076 <br />• Medicare - 6.30% for 2021, decreasing to an ultimate rate of 4.0% in 2076 <br /> <br />The long-term expected rate of return on OPEB plan investments (comprised of capital appreciation and <br />reinvestment of dividends, interest, and other distributions) is determined through a combination of <br />historical rates of returns, valuation projections, and economic expectations. The expected return is then <br />calculated by weighting the returns for each asset class according to the exposure as determined by <br />HighMark’s current strategic allocation. Expected returns are developed and annually reviewed. The target <br />allocation and best estimates of real rates of return for each major asset class are summarized in the <br />following table: <br />Long-Term <br />Target Expected Real <br />Asset Class Allocation Rate of Return <br />Global Equity 29.00% 4.82% <br />Fixed Income 65.00% 1.47% <br />Real Estate 1.00% 3.76% <br />Cash 5.00% 0.06% <br />Total 100.0% <br /> <br /> <br /> <br />83230