Page 56 - BAA CAFR 2017

BIRMINGHAM AIRPORT AUTHORITY
NOTES TO THE FINANCIAL STATEMENTS

NOTE 10 PENSION PLAN (CONTINUED)

of return on the System’s investments was applied to the first 29 periods of
projected benefit payments and a 3.58% municipal bond rate was applied to all
periods thereafter to determine the total pension liability. The 3.58% municipal
bond rate is based on an index of 20-year, tax-exempt general obligation bonds,
published weekly by the Federal Reserve. (The chosen rate is the Bond Buyer 20-
Bond GO Index rate published closest to, but not later than, the measurement date
of June 30, 2017.

Sensitivity of the net pension liability to changes in the discount rate
The following presents the net pension liability of the System, calculated using the
discount rate of 5.43%, as well as what the System’s net pension liability would be
if it were calculated using a discount rate that is one percentage point lower (4.43%)
or one percentage point higher (6.43%) than the current rate:

1% Decrease Current Discount 1% Increase
(4.43%) Rate (5.43%) (6.43%)
Net pension liability $934,877,904 $707,126,096 $517,749,069

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