I-1 - Preliminary Official Statement - UR Loan Agreement

Contributions – Contribution rates are established by IPERS following the annual actuarial valuation which applies IPERS’ Contribution Rate Funding Policy and Actuarial Amortization Method. State statute limits the amount rates can increase or decrease each year to 1 percentage point. IPERS Contribution Rate Funding Policy requires the actuarial contribution rate be determined using the “entry age normal” actuarial cost method and the actuarial assumptions and methods approved by the IPERS Investment Board. The actuarial contribution rate covers normal cost plus the unfunded actuarial liability payment based on a 30-year amortization period. The payment to amortize the unfunded actuarial liability is determined as a level percentage of payroll based on the Actuarial Amortization Method adopted by the Investment Board. In fiscal year 2019, pursuant to the required rate, Regular members contributed 6.29% of covered payroll and the City contributed 9.44% of covered payroll, for a total rate of 15.73%. Protection occupation members contributed 6.81% of covered payroll and the City contributed 10.21% of covered payroll, for a total rate of 17.02%. The City’s contributions to IPERS for the year ended June 30, 2019 totaled $52,429. Net Pension Liability, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions – At June 30, 2019, the City reported a liability of $400,917 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2018 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability was based on the City’s share of contributions to IPERS relative to the contributions of all IPERS participating employers. At June 30, 2018, the City’s proportion was 0.006335%, which was an increase of 0.000578% over its proportion measured as of June 30, 2017. For the year ended June 30, 2019, the City’s pension expense, deferred outflows of resources and deferred inflows of resources totaled $54,321, $106,105 and $66,791, respectively. There were no non-employer contributing entities to IPERS. Actuarial Assumptions – The total pension liability in the June 30, 2018 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, as follows: Rate of inflation (effective June 30, 2017) 2.60% per annum Rates of salary increase 3.25 to 16.25% average, including inflation. (effective June 30, 2017) rates vary by membership group. Long-term investment rate of return 7.00% compounded annually, net of investment (effective June 30, 2017) expense, including inflation. Wage growth 3.25% per annum, based on 2.60% inflation (effective June 30, 2017) and 0.65% real wage inflation. The actuarial assumptions used in the June 30, 2018 valuation were based on the results of an economic assumption study dated March 24, 2017 and a demographic assumption study dated June 28, 2018. Mortality rates used in the 2018 valuation were based on the RP-2014 Employee and Healthy Annuitant Tables with MP-2017 generational adjustments. 29