FY22 financial report print.indd

Virginia Tech Financial Report 2021-2022

• Post-Retirement: Pub-2010 Benefits Weighted General Healthy Retiree Rates projected generationally with a Modified MP-2021 Improvement Scale; 110% of rates for females • Post-Disablement: Pub-2010 Benefits Weighted General Disabled Rates projected generationally with a Modified MP-2021 Improvement Scale; males and females set forward 3 years • Beneficiaries and Survivors: Pub-2010 Benefits Weighted General Contingent Annuitant Rates projected generationally with a Modified MP-2021 Improvement Scale; 110% of rates for males and female s The discount rate was based on the Bond Buyers GO 20 Municipal Bond Index as of the measurement date which is June 30, 2021. Changes of Assumptions The following actuarial assumptions were updated since the June 30, 2020 valuation based on the recent experience study are as follows: • Retiree participation – reduced rate from 45% to 40% • Spousal coverage and retiree participation were based on a blend of recent experience and the prior year assumptions. The mortality table has been updated from adjusted RP-2014 mortality tables using Scale BB to adjusted Pub-2010 Headcount-Weighted mortality tables projected generationally with modified MP-2021 Im provement Scales. No excise tax has been reflected due to the SECURE Act. Among the provisions was a repeal of three taxes and fees that were originally intended to help fund the Affordable Care Act (ACA): i) the excise tax on high-cost health plans (Cadillac tax); ii) the annual fee on health insurance providers; and iii) the medical devise excise tax. The trend rates were updated based on economic conditions as of June 30, 2021. Additionally, the discount rate was decreased from 2.21% to 2.16% based on the Bond Buyers GO 20 Municipal Bond Index. There were no plan changes in the valuation since the prior year. VSDP, GLI, HIC, and LODA program actuarial assumptions VSDP, GLI, and HIC – The total liability for these programs was based on an actuarial valuation as of June 30, 2020, using the Entry Age Normal actuarial cost method and the following assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2021. Inflation 2.50 percent Salary increases, including inflation General state employees 3.50 percent – 5.35 percent Teachers (GLI only) 3.50 percent – 5.95 percent SPORS employees 3.50 percent – 4.75 percent VaLORS employees 3.50 percent – 4.75 percent JRS employees (GLI and HIC only) 4.50 percent Locality – General employees (GLI only) 3.50 percent – 5.35 percent Locality – Hazardous Duty employees (GLI only) 3.50 percent – 4.75 percent Investment rate of return 6.75 percent, net of OPEB plan investment expenses, including inflation LODA - The total liability for these programs was based on an actuarial valuation as of June 30, 2020, using the Entry Age Normal actuarial cost method and the following assumptions, applied to all periods included in the measurement and rolled forward to the measurement date of June 30, 2021. Inflation 2.50 percent Salary increases, including inflation General state employees N/A SPORS employees N/A VaLORS employees N/A Locality employees N/A Medical cost trend rates assumption Under age 65 7.00 percent – 4.75 percent Ages 65 and older 5.375 percent – 4.75 percent Year of ultimate trend rate Under age 65 Fiscal year ended 2029 Ages 65 and older Fiscal year ended 2024 Investment rate of return 2.16 percent, including inflation* * Since LODA is funded on a current-disbursement basis, the assumed annual rate of return of 2.16% was used since it approximates the risk-free rate of return. Mortality rates – General State Employees (VSDP, GLI, HIC, LODA) • Pre-Retirement: Pub-2010 Amount Weighted General Employee Rates projected generationally; females set forward 2 years. • Post-Retirement: Pub-2010 Amount Weighted General Healthy Retiree Rates projected generationally; 110% of rates for females. • Post-Disablement: Pub-2010 Amount Weighted General Disabled Rates projected generationally; males and females set forward 3 years • Beneficiaries and Survivors: Pub-2010 Amount Weighted General Contingent Annuitant Rates projected generationally; 110% of rates for males and females. • Mortality Improvement Scale: Rates projected generationally with Modified MP-2020 Improvement Scale that is 75% of the MP-2020 rates The actuarial assumptions used in the June 30, 2020 valuation were based on the results of an actuarial experience study for the period from July 1, 2016 through June 30, 2020, except the change in the discount rate, which was based on VRS Board action effective as of July 1, 2019. Changes to the actuarial assumptions as a result of the experi ence study are as follows: Mortality Rates Update to PUB2010 public sector mortality tables. For future mortality improvements, replace load with a modified Mortality Improvement Scale MP-2020 Retirement Rates Adjusted rates to better fit experience for Plan 1; set separate rates based on experience for Plan 2/Hybrid; changed final retirement age from 75 to 80 for all Withdrawal Rates Adjusted rates to better fit experience at each year age and service through 9 years of service Disability Rates No change Salary Scale No change Line of Duty Disability No change Discount Rate No change (Discount rate does not apply to LODA) Mortality rates – Teachers (GLI) • Pre-Retirem ent: Pub-2010 Amount Weighted Teachers Employee Rates projected generationally; 110% of rates for males. • Post-Retirement: Pub-2010 Amount Weighted Teachers Healthy Retiree Rates projected generationally; males set forward 1 year; 105% of rates for females. • Post-Disablement: Pub-2010 Amount Weighted Teachers Disabled Rates projected generationally; 110% of rates fro males and females.

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Notes to Financial Statements