Page 100 - Moreno Valley 2025 Annual Financial Report

City of Moreno Valley, California

Notes to Financial Statements
For the Year Ended June 30, 2025

Note 9. Other Post Employment Benefits (OPEB) (Continued)

Discount rate

The discount rate used to measure the total OPEB liability is 6.40%. This is the expected
long-term rate of return on City assets using the Strategy I asset allocation provided by
California Employers’ Retiree Benefit Trust (CERBT). The projection of cash flows used to
determine the discount rate assumed that the City contribution will be made at rates equal
to the actuarially determined contribution rates. Base on those assumptions, the OPEB plan’s
fiduciary net position is projected to cover all future OPEB payments. Therefore, the discount
rate was set equal to the long-term expected rate of return.

Long–Term Expected Real Rate of Return

The long-term expected rate of return is determined using the long-term rates of return
developed by the CalPERS Investment Office in their report dated August 9, 2024. The target
allocation and the arithmetic expected return for each major asset class are summarized in
the following table:

Projected
Target Real Rates
Asset Class Allocation of Return
Global Equity 49% 6.90%
Fixed Income 23% 4.10%
REITS 20% 6.30%
TIPS 5% 3.90%
Commodities 3% 4.60%

Changes in the Net OPEB Liability

Increases (Decreases)
Total OPEB Plan Fiduciary Net OPEB
Liability Net Position Liability
Balance as of fiscal year end June 30, 2024 $ 19,850,831 $ 16,430,996 $ 3,419,835
Changes for the year:
Service Cost 521,624 - 521,624
Interest 1,235,326 - 1,235,326
Differences Between Expected and Actual (219,954) - (219,954)
Changes of Assumptions (1,546,667) - (1,546,667)
Employer - City’s Contributions - 1,992,364 (1,992,364)
Employer - Implicit Subsidy - 368,757 (368,757)
Net Investment Income - 1,901,587 (1,901,587)
Benefit Payments (845,729) (845,729) -
Implicit Subsidy (368,757) (368,757) -
Administrative Expense - (5,711) 5,711
Other Miscellaneous Income/ (Expense) - 6,467 (6,467)
Net Changes (1,224,157) 3,048,978 (4,273,135)
Balance as of fiscal year end June 30, 2025 $ 18,626,674 $ 19,479,974 $ (853,300)

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