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Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2016 NOTE 14 — OTHER POSTEMPLOYMENT BENEFITS PLAN - Continued D. Funded Status and Funding Progress - Continued Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The Schedule of Funding Progress and Schedule of Employer Contributions, presented as required supplementary information immediately following the County Notes to the Financial Statements (on page 109), presents multi-year trend information regarding liabilities, funding, and payroll. The data also reflects whether the actuarial value of the plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. This information includes the current and past two actuarial valuations as well as four years of funding data. E. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the benefits provided under terms of the substantive plan (the plan as understood by the employer and the plan members) in effect at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan members in the future. Actuarial calculations reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The actuarial methods are: Actuarial cost method Amortization method Amortization period (closed) Asset valuation method The actuarial assumptions are: Investment rate of return Projected annual salaries increase Healthcare cost trend rate Entry age normal cost method Level percent of payroll projected to grow 3.50% per year 12 years Market value 6.0% 4.0%-9.47% 7.0% Inflation rate 2.50% 99 (net administrative expenses) (dependent on years of service and age) (decreasing 1/2% each year & thereafter to the ultimate value of 4.55%)