2016_SUNY_Optometry_PRR

2 0 1 5 A N N U A L F I N A N C I A L R E P O R T

Notes to Financial Statements June 30, 2015 and 2014

8. Retirement Plans (continued)

with adjustments for mortality improvements based on Society of Actuaries Scale MP-2014. The actuarial assumptions used in the April 1, 2014 valuation were based on the actuarial experience study for the period April 1, 2005 to March 31, 2010. Best estimates of arithmetic real rates of return for each major asset class included in the ERS target asset allocation as of March 31, 2015 are as follows:

The net pension liability was measured as of March 31, 2015, and was determined by an actuarial valuation as of April 1, 2014, with update procedures used to roll forward the total pension liability to March 31, 2015. The proportionate share of the net pension liability was 5.32 percent measured at March 31, 2015, which is the same as the previous measurement date of March 31, 2014. For the year ended June 30, 2015, the State University recognized pension expense of $159.1 million related to ERS. At June 30, 2015, the State University reported deferred outflows and deferred inflows of resources related to ERS from the following sources (in thousands):

Long-term Target expected real Allocation rate of return

Asset class

Domestic equities International equities

38%

7.30%

13 10

8.55

Private equities

11.00

Real Estate

8 3 3 3

8.25 6.75 8.60 8.65 4.00 2.25 4.00

Deferred Outflows Deferred Inflows of Resources: of Resources:

Absolute return strategies Opportunistic portfolio

35

Differences between expected and actual experience Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between employer contributions and proportionate share of contributions

Real assets

Bonds and mortgages

18

$ 5,755

–

Cash

2 2

Inflation-indexed bonds

Total

100%

31,224

–

Sensitivity of the net pension (liability) asset to changes in the discount rate. The following presents the net pension (liability) asset of the State University, calculated using the discount rate of 7.5 percent as well as what the State University’s net pension (liability) asset would be if it were calculated using a discount rate that is 1 percentage point lower (6.5%) and 1 percentage point higher (8.5%) than the current year rate (in thousands):

2,805

17,324 17,324

Total

$39,784

Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense in the amount of $5.6 million each year over the next four fiscal years. The actuarial assumptions included in the actuarial valuation included an inflation factor of 2.7 percent, projected salary increases of 4.9 percent and investment rate of return of 7.5 percent. The ERS Plan also assumes a projected COLA of 50 percent of the annual CPI published by U.S. Bureau of Labor, but cannot be less than 1 percent or exceed 3 percent. Annuitant mortality rates are based on April 1, 2005 – March 31, 2010 system experience,

1% Current 1% Decrease Discount Increase (6.5%) (7.5%) (8.5%)

Net Pension (Liability) Asset $(1,198,265) (179,773) 680,087

The ERS retirement system issues a publicly available financial report that includes financial statements and supplementary information and provides detailed information about the pension plan’s fiduciary net position. The report may be obtained at http://www.osc.state.ny.us/retire/about_ us/financial_statements_index.php.