Page 54 - BAA CAFR 2017

BIRMINGHAM AIRPORT AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS

NOTE 10 PENSION PLAN (CONTINUED)

Target Long-Term Expected
Asset Class Allocation Real Rate of Return*

Large cap domestic equity 35% 6.9%
Small and mid-cap domestic equity 10% 7.8%
International equity 20% 6.7%
Core fixed income 10% 2.9%
Short-term high yield fixed income 5% 4.9%
REITs 5% 5.5%
Hedge funds 15% 3.7%
Total 100%

Investments – Fair Value Measurements
The Plan categorizes its fair value measurements, within the fair value hierarchy
established by accounting principles generally accepted in the United States of
America. Debt and equity securities classified in Level 1 of the fair value hierarchy
are valued using prices quoted in active markets for those securities. Debt securities
classified in Level 2 of the fair value hierarchy are valued using matrix pricing
techniques. Matrix pricing is used to value securities based on the securities’
relationship to benchmark quoted process. Alternative investments classified in
Level 3 are valued using discounted cash flow techniques, comparable transactions,
and publicly quoted companies’ methods. The Plan has the following recurring fair
value measurements, as of June 30, 2017

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