KENTUCKY STATE UNIVERSITY
NOTES TO FINANCIAL STATEMENTS
June 30, 2018
The target asset allocation and best estimates of arithmetic nominal rates of return for each major asset class are summarized in the following table:
| Non-hazardous |
| Target | Long-Term Nominal |
|---|
| Asset Class | Allocation | Rate of Return |
|---|
| 2018 | | |
|---|
| U.S. Equity | 17.50% | 5.75% |
|---|
| International Equity | 17.50 | 7.38 |
|---|
| Global Bonds | 10.00 | 2.63 |
|---|
| Global Credit | 17.00 | 3.63 |
|---|
| Real Estate | 5.00 | 6.63 |
|---|
| Absolute Return | 10.00 | 5.63 |
|---|
| Real Return | 10.00 | 5.13 |
|---|
| Private Equity | 10.00 | 8.25 |
|---|
| Cash Equivalents | 3.00 | 1.88 |
|---|
| Total | 100% | |
|---|
| Hazardous |
|---|
| Target | Long-Term Nominal |
|---|
| Asset Class | Allocation | Rate of Return |
|---|
| 2018 | | |
|---|
| U.S. Equity | 17.50% | 5.75% |
|---|
| International Equity | 17.50 | 7.38 |
|---|
| Global Bonds | 4.00 | 2.63 |
|---|
| Global Credit | 2.00 | 3.63 |
|---|
| High Yield | 7.00 | 5.75 |
|---|
| Emerging Market Debt | 5.00 | 5.50 |
|---|
| Private Credit | 10.00 | 8.75 |
|---|
| Real Estate | 5.00 | 7.63 |
|---|
| Absolute Return | 10.00 | 5.63 |
|---|
| Real Return | 10.00 | 6.13 |
|---|
| Private Equity | 10.00 | 8.25 |
|---|
| Cash Equivalents | 2.00 | 1.88 |
|---|
| Total | 100% | |
|---|
Changes in Assumptions and Benefit Terms Since Prior Measurement Date - Since the prior measurement date, the demographic and economic assumptions that affect the measurement of the total pension liability have been updated as follows:
The assumed investment rate of return was decreased from 6.75% to 5.25% (Non-hazardous) and 7.50% to 6.25% (Hazardous).
The assumed rate of inflation was reduced from 3.25% to 2.30%.
Payroll growth assumption was reduced from 4.00% to 3.05%.
Changes Since Measurement Date - There were no changes between the measurement date of the collective net pension liability and the employer's reporting date.
34.