b'City of Dover Tuscarawas County, Ohio Notes to the Basic Financial Statements For the Year Ended December 31, 2019 The long-term expected rate of return on health care investment assets was determined using a building-block method in which best-estimate ranges of expected future real rates of return are developed for each majorassetclass.Theserangesarecombinedtoproducethelong-termexpectedrealrateofreturnby weightingtheexpectedfuturerealratesofreturnbythetargetassetallocationpercentage,adjustedfor inflation.During 2018, OPERS managed investments in three investment portfolios: the Defined Benefit portfolio, the Health Care portfolio and the Defined Contribution portfolio. The Health Care portfolio includes the assets for health care expenses for the Traditional Pension Plan, Combined Plan and Member-Directed Plan eligible members.WithintheHealthCareportfolio,contributionsintotheplansareassumedtobereceived continuously throughout the year based on the actual payroll payable at the time contributions are made, and health care-related payments are assumed to occur mid-year. Accordingly, the money-weighted rate of return is considered to be the same for all plans within the portfolio. The annual money-weighted rate of return expressinginvestmentperformance,netofinvestmentexpensesandadjustedforthechangingamounts actually invested, for the Health Care portfolio was a loss of 5.6 percent for 2018. The allocation of investment assets within the Health Care portfolio is approved by the Board of Trustees as outlined in the annual investment plan.Assets are managed on a total return basis with a long-term objective of continuing to offer a sustainable health care program for current and future retirees.OPERS primary goal is to achieve and maintain a fully funded status for the benefits provided through the defined pension plans.Healthcareisadiscretionarybenefit.ThefollowingtabledisplaystheBoard-approvedasset allocation policy for 2018 and the long-term expected real rates of return:Weighted AverageLong-Term ExpectedTarget Real Rate of ReturnAsset Class Allocation (Arithmetic)Fixed Income 34.00 % 2.42 %Domestic Equities 21.00 6.21Real Estate Investment Trust 6.00 5.98International Equities 22.00 7.83Other Investments 17.00 5.57Total 100.00 % 5.16 % Discount RateAsingle discount rateof 3.96percentwas usedtomeasuretheOPEBliability onthe measurement date of December 31, 2018. A single discount rate of 3.85 percent was used to measure the OPEB liability on the measurement date of December 31, 2017. Projected benefit payments are required to be discounted to their actuarial present value using a single discount rate that reflects (1) a long-term expected rate of return on OPEB plan investments (to the extent that the health care fiduciary net position is projected to be sufficient to pay benefits) and (2) tax-exempt municipal bond rate based on an index of 20-year general obligation bonds with an average AA credit rating as of the measurement date (to the extent that the contributions for use with the long-term expected rate are not met). This single discount rate was based on an expected rate of return on the health care investment portfolio of 6.00 percent and a municipal bond rate of 3.71 percent. The projection of cash flows used to determine this single discount rateassumedthatemployercontributionswillbemadeatratesequaltotheactuariallydetermined contributionrate.Basedontheseassumptions,thehealthcarefiduciarynetpositionandfuture contributions were sufficient to finance health care costs through 2031. As a result, the long-term expected rate of return on health care investments was applied to projected costs through the year 2031, and the municipal bond rate was applied to all health care costs after that date. - 71 71 -'