FY 2005 - University of Missouri System

N otes to Combined Financial StatementsF o r t h e y e a r s e n d e d J u n e 3 0 , 2 0 0 5 a n d 2 0 0 4Significant assumptions used in the valuations for the years ended June 30, 2005 and 2004 were:2005 2004Assumed Annual Rate of Return on Investments 8.0% 8.0%Projected Annual Average Salary Increases for Academic andAdministrative Employees 5.2% 5.2%Projected Annual Average Salary Increases for Clerical andService Employees 4.5% 4.5%Future Retiree Ad Hoc Increases or Cost of Living Adjustments 0.0% 0.0%The actuarial value of assets is based on the cost of the Plan’s underlying assets. Although a net pension obligation didnot exist as of June 30, 2005, any future liabilities incurred would be amortized over 20 years using the level dollarmethod on an open basis.The schedule of funding progress is as follows:16. OTHER POSTEMPLOYMENT BENEFITSSCHEDULE OF FUNDING PROGRESSRequired Supplementary Information - Unaudited(in thousands of dollars)DateActuarialValue ofAssetsActuarialAccruedLiabilityFundingExcess/(UnfundedLiability)FundedRatioCoveredPayrollFunding Excess/(Unfunded Liability)as a % of CoveredPayroll10/1/99 $ 1,740,756 $ 1,531,205 $ 209,551 113.7% $ 623,318 33.5 %10/1/00 1,906,678 1,686,684 219,994 113.0% 646,198 34.0 %10/1/01 2,119,047* 1,813,018 306,029 116.9% 696,163 44.0 %10/1/02 1,949,794 1,937,617 12,177 100.6% 654,575 1.9 %10/1/03 2,067,727 2,030,613 37,114 101.8% 687,681 5.4 %10/1/04 2,075,032 2,144,738 (69,706) 96.8% 753,266 (9.3)%* The actuarial value of asset methodology changes effective October 1, 2001, from the book value method, adjusted, if necessary, to bewithin 20% of market, to the expected return asset valuation method, adjusted, if necessary, to be within 20% of market.In addition to the pension benefits described in Note 15, the University provides postretirement medical, dental and lifeinsurance benefits to employees who retire from the University after attaining age 55 and before reaching age 60 withten or more years of service, or, who retire after attaining age 60 with five or more years of service. As of June 30, 2005and 2004, 5,475 retirees met those eligibility requirements.For employees retiring prior to September 1, 1990, the University contributes toward premiums at the same rate as foractive employees; 2/3 of the premium for medical benefits and 1/2 of the dental plan premium. For employees whoretired under the terms of the Retirement and Death Benefit Plan on September 1, 1990 or thereafter, the Universitycontributes toward premiums on the basis of the employee’s length of service and age at retirement.The University makes available two group term life insurance options. Option A coverage is equal to the retiree’ssalary at the date of retirement and graded adjustments in coverage made at the attainment of specific age levels.This coverage is paid in full by the University. Option B coverage is equal to two times the retiree’s salary at thedate of retirement with graded adjustments in coverage made at the attainment of specific age levels. The Universitypays approximately 91% of the cost of Option B coverage. Coverage for group term life insurance ends on January 1following the retiree’s 70th birthday.Postemployment medical, dental and life insurance benefits are also provided to those long-term disability claimantswho were vested in the University’s retirement plan at the date their disability began, provided the onset date of theirdisability was on or after September 1, 1990. As of June 30, 2005 and 2004, 228 and 214 long-term disability claimantsmet those eligibility requirements.462 0 0 5 F i n a n c i a l R e p o r t : U n i v e r s i t y o f M i s s o u r ia c o m p o n e n t u n i t o f t h e S t a t e o f M i s s o u r i