Geometric returns represent the compounded rate of growth of a portfolio. The method eliminates the effects created by cash flows. - 55 - SCHOOL DISTRICT OF CLAYTON NOTES TO THE FINANCIAL STATEMENTS June 30, 2020 NOTE G – RETIREMENT PLANS - CONTINUED Actuarial Assumptions - Continued Asset class Target asset allocation Long-term expected real return arithmetic basis Weighted long-term expected real return arithmetic basis U.S. Public Equity % 27.00 % 5.16 % 1.39 Public Credit 7.00 2.17 0.15 Hedged Assets 6.00 4.42 0.27 Non-U.S. Public Equity 15.00 6.01 0.90 U.S. Treasuries 16.00 0.96 0.15 U.S. TIPS 4.00 0.80 0.03 Private Credit 4.00 5.60 0.22 Private Equity 12.00 9.86 1.18 Private Real Estate 9.00 3.56 0.32 Total % 100.00 4.61 Inflation 2.25 Long-term arithmetical nominal return 6.86 Effect of covariance matrix 0.64 Long-term expected geometric return % 7.50 - 56 -

Treasuries 16.00 0.96 0.15 U.S. TIPS 4.00 0.80 0.03 Private Credit 4.00 5.60 0.22 Private Equity 12.00 9.86 1.18 Private Real Estate 9.00 3.56 0.32 Total % 100.00 4.61 Inflation 2.25 Long-term arithmetical nominal return 6.86 Effect of covariance matrix 0.64 Long-term expected geometric return % 7.50 - 56 - SCHOOL DISTRICT OF CLAYTON NOTES TO THE FINANCIAL STATEMENTS June 30, 2020 NOTE G – RETIREMENT PLANS - CONTINUED Actuarial Assumptions - Continued Discount Rate The long-term expected rate of return used to measure the total pension liability was 7.50% as of June 30, 2019, and is consistent with the long-term expected geometric return on plan investments. The actuarial assumed rate of return was 8.00% from 1980 through fiscal year 2016. The Board of Trustees of the Systems adopted a new actuarial rate of return of 7.75% effective with the June 30, 2016 valuation based on the actuarial experience studies and asset-liability study conducted during the 2016 fiscal year. As previously discussed, the Board of Trustees of the Systems further reduced the assumed rate of return to 7.6% effective with the June 30, 2017 valuation, and to 7.60% effective with the June 30, 2018 valuation. The projection of cash flows used to determine the discount rate assumed that employer contributions would be made at the actuarial calculated rate computed in accordance with assumptions and methods stated in the funding policy adopted by the Board of Trustees of the Systems, which requires payment of the normal cost and amortization of the unfunded actuarially accrued liability in level percent of employee payroll installments over 30 years utilizing a closed period, layered approach. Based on this assumption, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Discount Rate Sensitivity The sensitivity of the District's net pension liabilities to changes in the discount rate is presented below. The District's net pension liabilities calculated using the discount rate of 7.50% is presented as well as the net pension liabilities using a discount rate that is 1.0% lower (6.50%) or 1.0% higher (8.50%) than the current rate. 1% decrease (6.50%) Current rate (7.50%) 1% increase (8.50%) PSRS Proportionate share of the net pension liability / (asset) $ 74,042,400 $ 40,701,088 $ 12,987,653 PEERS Proportionate share of the net pension liability / (asset) 7,422,931 3,908,930 961,555 - 57 -

Discount Rate Sensitivity The sensitivity of the District's net pension liabilities to changes in the discount rate is presented below. The District's net pension liabilities calculated using the discount rate of 7.50% is presented as well as the net pension liabilities using a discount rate that is 1.0% lower (6.50%) or 1.0% higher (8.50%) than the current rate. 1% decrease (6.50%) Current rate (7.50%) 1% increase (8.50%) PSRS Proportionate share of the net pension liability / (asset) $ 74,042,400 $ 40,701,088 $ 12,987,653 PEERS Proportionate share of the net pension liability / (asset) 7,422,931 3,908,930 961,555 - 57 - SCHOOL DISTRICT OF CLAYTON NOTES TO THE FINANCIAL STATEMENTS June 30, 2020 NOTE H – DEFERRED COMPENSATION PLANS The District offers its employees a choice of deferred compensation plans created in accordance with Internal Revenue Code Sections 403(b) or 457. These plans, available to all District employees, permit them to defer a portion of their salary until future years. The District makes these plans available to its employees as an accommodation only. The District’s role in connection with the plans is generally limited to processing the paperwork necessary to remit the participant’s salary withholdings (deferrals) to the unrelated financial institution. NOTE I – OTHER POSTEMPLOYMENT BENEFITS (OPEB) Plan Description and Benefits Provided In addition to providing the pension benefits described above, the District provides continuation of medical, dental, and vision insurance coverage, including prescription drugs, to employees who are eligible for normal or early retirement under PSRS or PEERS. Retirees and their dependents that elect to participate must pay the premium in effect for the current plan year or any subsequent year at the premium rates in effect at that time. Since retirees pay the premium for each year, the District's share of any premium cost is determined on the basis of a blended rate or implicit rate subsidy calculation. The plan is not accounted for as a trust fund since an irrevocable trust has not been established. A stand-alone financial report is not available for the plan. No assets are accumulated in a trust that meets all of the criteria in GASB Statement No. 75, paragraph 4. Actuarial analysis completed on employees covered by benefit terms at June 30, 2020: Number Average Age Actives 451 46.4 Retired and beneficiaries 190 71.2 Total 641 Contributions The District currently pays for the implicit rate subsidy associated with these postemployment health care benefits on a pay-as-you-go basis. The District determines contribution requirements and they may be amended by the District. - 58 -

Actuarial analysis completed on employees covered by benefit terms at June 30, 2020: Number Average Age Actives 451 46.4 Retired and beneficiaries 190 71.2 Total 641 Contributions The District currently pays for the implicit rate subsidy associated with these postemployment health care benefits on a pay-as-you-go basis. The District determines contribution requirements and they may be amended by the District. - 58 - SCHOOL DISTRICT OF CLAYTON NOTES TO THE FINANCIAL STATEMENTS June 30, 2020 NOTE I – OTHER POSTEMPLOYMENT BENEFITS (OPEB) - CONTINUED Total OPEB Liability The District’s total OPEB liability of $5,109,453 was measured as of June 30, 2020, and the total liability used to calculate the total OPEB was determined by an actuarial valuation as of June 30,

Inflation: 2.30% Salary Increases: 3.00% Discount Rate: 2.21% based on the 20 year Bond GO Index at June 30, 2020. The rate for the prior year was 3.50%. Healthcare Cost Trend Rates: 6.00% for 2020, gradually decreasing to an ultimate rate of 3.70% for 2073 and beyond. Participation: It is assumed that 40% of employees who retire prior to age 65 will elect medical and dental coverage upon retirement. Mortality: Pub-2010 Teachers Mortality for Employees and Healthy Annuitants, with generational projection per Scale MP-2019. Changes in Total OPEB Liability The components of the total OPEB liability of the District at June 30, 2020 are as follows: Total OPEB Liability Balances as of June 30, 2019 $ 5,765,488 Service cost 216,081 Interest on total OPEB liability 205,795 Economic/demographic gains/losses (1,530,458) Changes in assumptions 657,732 Benefit payments (205,185) Balances as of June 30, 2020 $ 5,109,453 - 59 -