Acton-Boxborough Regional School District Notes to Basic Financial Statements Year Ended June 30, 2024
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 of by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The District’s expected future real rate of return of 4.64% is added to the expected inflation of 2.50% to produce the long-term expected nominal rate of return of 7.14%. Best estimates of geometric real rates of return for each major asset class included in the OPEB plan’s target asset allocation as of June 30, 2024 are summarized in the following table.
Long-Term Expected Long-Term Expected
Asset Class
Asset Allocation
Real Rate of Return
4.91% 5.29% 5.32% 6.13% 2.30% 2.02% 6.35% 6.25% 0.00%
Domestic equity - large cap………………… 30.25% Domestic equity - small/mid cap…………… 10.25% International equities - emerging market…… 6.75% Domestic fixed income……………………… 20.50% International equities - developed market… 13.00%
International fixed income…………………
3.50%
Alternatives………………………………… 12.00%
Real estate…………………………………
3.25%
Cash………………………………………… 0.50%
Total………………………………………… 100.00%
Discount rate
The discount rate used to measure the total OPEB liability was 6.55% as of June 30, 2024, and 5.92% as of June 30, 2023. The projection of cash flows used to determine the discount rate assumed that contributions will be made in accordance with the District’s funding policy. Based on these assumptions, the OPEB Plan’s Fiduciary Net Position is projected to be insufficient to make all projected benefit payments to current plan members. Therefore, the long-term expected rate of return on the OPEB Plan assets is applied to the projected benefits payments which the Fiduciary Net Position is expected to be sufficient to cover until 2074 and the Municipal Bond Rate is applied thereafter. The Municipal Bond Rate is based on the S&P Municipal Bond 20 – Year High Grade Index ("SAPIHG"), which was 4.21% as of June 30, 2024. The S&P Municipal Bond 20 - Year High Grade Index is the index rate for 20-year, tax exempt general obligation municipal bonds with an average rate of AA/Aa or higher.
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