b'Capital Region Airport Commission NOTES TO FINANCIAL STATEMENTS June 30, 2025 and 2024 Note 12.VIRGINIA LOCAL DISABILITY PROGRAM (VLDP) (continued) Long-Term Expected Rate of Return The long-term expected rate of return on VRS System investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of VRS System investment expense and inflation) are developed for each major asset class. Theserangesarecombinedtoproducethelong-termexpectedrateofreturnbyweightingthe expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimate of arithmetic real rates of return for each major asset class are summarized in the following table: Long-term Arithmetic Weighted AverageTarget Asset Long-term Expected Long-term ExpectedAsset Class (Strategy) Allocation Rate of Return Rate of Return*Public Equity 32.00% 6.70% 2.14%Fixed Income 16.00% 5.40% 0.86%Credit Strategies 16.00% 8.10% 1.30%Real Assets 15.00% 7.20% 1.08%Private Equity 15.00% 8.70% 1.31%PIP - Private Investment Partnerships 1.00% 8.00% 0.08%Diversifying Strategies 6.00% 5.80% 0.35%Cash 2.00% 3.00% 0.06%Leverage -3.00% 3.50% -0.11%Total 100.00% 7.07%Expected arithmetic nominal return** 7.07%*Theaboveallocationprovidesaone-yearexpectedreturnof7.07%(includes2.50%inflationassumption). However, one-year returns do not take into account the volatility present in each of theassetclasses.Insettingthelong-termexpectedreturnfortheSystem,stochasticprojectionsareemployed to model future returns under various economic conditions. These results provide a range ofreturns over various time periods that ultimately provide a median return of 7.10%, including expectedinflation of 2.50%.**On June 15, 2023, the VRS Board elected a long-term rate of return of 6.75%, which was roughly at the 45 thpercentile of expected long-term results of the VRS fund asset allocation at that time, providing a median return of 7.14%, including expected inflation of 2.50%. Discount Rate The discount rate used to measure the total VLDP OPEB was 6.75%. The projection of cash flows used to determine the discount rate assumed that employer contributions will be made in accordance with the VRS funding policy at rates equal to the actuarially determined contribution rates adopted by the VRS Board of Trustees. Through the fiscal year ending June 30, 2024, the rate contributed by the Commission for the VLDP will be subject to the portion of the VRS Board-certified rates that are funded by the Virginia General Assembly which was 100% of the actuarially determined contribution rate.From July 1, 2024 on, all agencies are assumed to contribute 100% of the actuarially determined contribution rates. Based on those assumptions, the VLDP OPEB plans fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-termexpectedrateofreturnwasappliedtoallperiodsofprojectedbenefitpaymentsto determine the total VLDP OPEB liability. 79'