These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class for the June 30, 2022, actuarial valuation, are summarized in the following table:
| Asset Class | Target Allocation | Long-Term Nominal Rate of Return |
|---|---|---|
| Large Cap U.S. Equity | 35.40 % | 5.00 % |
| Small Cap U.S. Equity | 2.60 | 5.50 |
| Developed International Equity | 15.70 | 5.50 |
| Emerging Markets Equity | 5.30 | 6.10 |
| Fixed Income | 15.00 | 1.90 |
| High Yield Bonds | 5.00 | 3.80 |
| Other Additional Categories | 5.00 | 3.60 |
| Real Estate | 7.00 | 3.20 |
| Private Equity | 7.00 | 8.00 |
| Cash | 2.00 | 1.60 |
| Total | 100.00 % |
The discount rate used to measure the total pension liability at June 30, 2022, was 7.10%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rates and the Employer contributions will be made at actuarially determined contribution rates, adjusted by 95% for all fiscal years in the future. Based on those assumptions, at the June 30, 2023, measurement date, the pension plan's fiduciary 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.
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