Audit for Fiscal Year Ending June 30, 2017

CITY OF SPENCER NOTES TO FINANCIAL STATEMENTS - Continued JUNE 30, 2017

6. IOWA PUBLIC EMPLOYEES' RETIREMENT SYSTEM (IPERS) - Continued

Actuarial Assumptions - Continued

Long-Term Expected Real Rate of Return

Asset Class

Asset Allocation

Core plus fixed income Domestic equity International equity Private equity/debt Real estate Credit opportunities U.S. TIPS Other real assets Cash

28% 24 16 11

1.90% 5.85 6.32

10.31 3.87 4.48 1.36 6.42

8 5 5 2 _1_

(.26)

Total

Discount Rate - The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the contractually required rate and contributions from the City will be made at contractually required rates, actuarially determined. Based on those assumptions, IPERS' fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on IPERS' investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the City's Proportionate Share of the Net Pension Liability to Changes in the Discount Rate - The following presents the City's proportionate share of the net pension liability calculated using the discount rate of 7.50%, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1% lower (6.50%) or 1% higher (8.50%) than the current rate.

Discount Rate (7.50%)

1% Increase (8.50%)

1% Decrease (6.50%)

City's proportionate share of the net pension liability

$4,308,599

$2,652,074

$1,253,968

IPERS' Fiduciary Net Position - Detailed information about the IPERS' fiduciary net position is available in the separately issued IPERS financial report which is available on IPERS' website at www.ipers.org.

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