KENTUCKY STATE UNIVERSITY
NOTES TO FINANCIAL STATEMENTS
June 30, 2017
At June 30, 2017, the University reported $1,879,131 as deferred outflows of resources related to pensions resulting from University contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the following fiscal year. Net deferred outflow (inflows) of resources at June 30, 2017, related to pensions will be recognized in pension expense as follows:
2018 $ (812,472)
2019 (812,472)
2020 (23,121)
2021 548,842
2022 (15,873)
$ (1,115,096)
Actuarial assumptions - The total pension liability was determined by actuarial valuations as of June 30, 2015 and update procedures were used to roll forward the total pension liability to the measurement date, using the following actuarial assumptions, applied to all periods included in the measurement:
| Inflation | 3.50% |
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| Salary Increases | 4.00 – 8.20%, including inflation |
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| Investment Rate of Return | 7.50%, net pension plan investment expense, including inflation |
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The rates of mortality for the period after service retirement are according to the RP-2000 Combined Mortality Table for Males and Females, as appropriate with adjustments for mortality improvements based on a projection of Scale AA to 2020 with a setback of 1 year for females.
The actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2005 - June 30, 2010 adopted by the Board on September 19, 2011. The results of the experience study for the period July 1, 2010-June 30, 2015 will be reflected in the June 30, 2016 valuation.
The long-term expected return on plan was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The June 30, 2017 target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:
| Asset Class | Target Allocation | Long-Term Nominal Rate of Return |
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| U.S. Equity | 45.0% | 6.4% |
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| Non U.S. Equity | 17.0 | 6.5 |
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| Fixed Income | 24.0 | 1.6 |
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| High Yield Bonds | 4.0 | 3.1 |
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| Real estate | 4.0 | 5.8 |
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| Alternatives | 4.0 | 6.8 |
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| Cash | 2.0 | 1.5 |
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| Total | 100% | |
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(Continued)
37.