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Indian River County, Florida <br />Notes To Financial Statements <br />Year Ended September 30, 2019 <br />90 <br /> <br /> <br />NOTE 13 - RETIREMENT PLAN - Continued <br /> <br />Retiree Health Insurance Subsidy (HIS) Program - Continued <br /> <br />Actuarial Assumptions: The total pension liability for the HIS Program in the July 1, 2019 actuarial <br />valuation was determined using the following actuarial assumptions, applied to all periods included in <br />the measurement: <br /> <br />Valuation date: July 1, 2019 <br />Measurement date: June 30, 2019 <br />Discount rate: 3.50% <br />Long-term expected rate of return: N/A <br />Municipal bond rate: 3.50% <br />Inflation: 2.60% <br />Salary increase: 3.25%, average, including inflation <br />Mortality: Generational RP-2000 with Projections Scale BB <br />Actuarial cost method: Individual Entry Age <br /> <br />The actuarial assumptions that determined the total HIS Program pension liability used in the July 1, <br />2019 valuation were based on the results of an actuarial experience study for the period July 1, 2013 <br />through June 30, 2018. <br /> <br />The following changes in actuarial assumptions occurred in 2019: <br /> <br /> The municipal rate used to determine the total pension liability was decreased from 3.87% to <br />3.50%. <br /> <br />Discount Rate for HIS Program: In general, the discount rate for calculating the total pension liability is <br />equal to the single rate equivalent to discounting at the long-term expected rate of return for benefit <br />payments prior to the projected depletion date. Because the HIS Program is essentially funded on a <br />pay-as-you-go basis, the depletion date is considered to be immediate. The single equivalent discount <br />rate is equal to the municipal bond rate selected by the plan sponsor. The Bond Buyer General <br />Obligation 20-Bond Municipal Bond Index was adopted as the applicable municipal bond index. <br /> <br />Long-term Expected Rate of Return: As stated above, the HIS Program is essentially funded on a pay- <br />as-you-go basis. As such, there is no assumption for a long-term expected rate of return on a portfolio, <br />no assumptions for cash flows into and out of the pension plan, or assumed asset allocation. <br /> <br />Sensitivity of the County’s Proportionate Share of the Net Position Liability to Changes in the Discount <br />Rate for the HIS Program:  The following presents the County’s proportionate share of the Net Pension <br />Liability (NPL) of the HIS Program calculated using the discount rate of 3.50%. Also presented is what <br />the County’s proportionate share of the HIS Program NPL would be if it were calculated using a <br />discount rate that is 1% lower or 1% higher than the current rate: <br /> <br /> 1% Decrease Current Discount 1% Increase <br /> (2.50%) Rate (3.50%) (4.50%) <br />County’s proportionate share of NPL $31,017,231 $27,171,124 $23,967,752