Notes to Financial Statements

The total pension liability of the PERSI Base Plan and total pension asset of the FRF in the June 30, 2022 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Mortality rates were based on the RP – 2000 combined table for healthy males or females as appropriate with the following offsets:

• Set back 3 years for teachers

• No offset for male fire and police

• Forward one year for female fire and police

• Set back one year for all general employees and all beneficiaries

Economic assumption for the Base Plan, and FRF were studied in the most recent actuarial experience study performed for the period 2015 through 2020. Demographic assumptions, including mortality, for the Base Plan and FRF were studied for the period 2015 through 2020.

The Total Pension Liability (Base Plan) and Asset (FRF) as of September 30, 2022 is based on the results of an actuarial valuation date of July 1, 2022.

Long-term Expected Rate of Return

The long-term expected rate of return on pension plan investments was determined using the building block approach and a forward-looking model in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.

Even though history provides a valuable perspective for setting the investment return assumption, PERSI relies primarily on an approach which builds upon the latest capital market assumptions. Specifically, PERSI uses consultants, investment managers and trustees to develop capital market assumptions in analyzing PERSI’s asset allocation. The assumptions and PERSI’s formal policy for asset allocation are shown below. The formal asset allocation policy is somewhat more conservative than the current allocation of PERSI’s assets. The best-estimate range for the long-term expected rate of return is determined by adding expected inflation to expected long-term real returns and reflecting expected volatility and correlation. The capital market assumptions are as follows:

Financial Section

Notes to Financial Statements

Discount Rate

The discount rate used to measure the total pension liability was 6.35%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current contribution rate. Based on these assumptions, the pension plans’ net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. The long-term expected rate of return was determined net of pension plan investment expense but without reduction for pension plan administrative expense.

The following presents the sensitivity of the City’s proportionate share of the net pension liability (asset) calculated using the discount rate of 6.35%, as well as what the City’s proportionate share of the net pension liability (asset) would be if it were calculated using a discount rate that is 1-percentage-point lower (5.35%) or 1-percentage-point higher (7.35%) than the current rate:

Employer’s proportionate share of the net pension liability (asset)

Pension Plan Fiduciary Net Position

Detailed information about the pension plan’s fiduciary net position is available in the separately issued PERSI financial report that is a publicly available financial report that includes financial statements and the required supplementary information for PERSI. That report may be obtained on the PERSI website at the www.persi. idaho.gov.

The fiduciary net position has been determined on the same basis used by the pension plan in the PERSI’s basic financial statements. Reconciliations were provided to reconcile total employer contributions to employer contributions shown in the PERSI’s statement of changes in fiduciary net position.

Payable to the Pension Plan

At September 30, 2022, the City reported payables to the defined benefit pension plan of $609 and $153 for legally required employer contributions and employee contributions which had been withheld from employee wages but not yet remitted to PERSI for the PERSI Base Plan and FRF, respectively.

Defined Contribution – PERSI Choice 401(k)

Employees of the City participating in the PERSI Base Plan or FRF may enroll in the PERSI Choice 401(k) defined contribution retirement savings plan available to active members and this participation is voluntary. The PERSI choice 401(k) is intended to be a governmental plan within the meaning of Code Section 414(d) and within the meaning of section 3(32) of the Employee Retirement Income Security Act (ERISA) and as such, is exempt from provisions of Title I ERISA. The City will match participants’ contributions in either the 457 deferred compensation plan or the PERSI Choice 401(k) up to 2% of base annual salary. A participant shall be 100% vested in their individual account at all times. The authority of the benefit and contribution terms are established and amended by the PERSI Board. The City recognized $2,503 contributions to the PERSI Choice 401(k) as benefits expense during the year ended September 30, 2022. The City recognized $95 for the employer’s liability outstanding for contributions for the period ended September 30, 2022.