b'Capital Region Airport Commission NOTES TO FINANCIAL STATEMENTS June 30, 2025 and 2024 Note 8. PENSION PLAN (continued) Long-Term Expected Rate of ReturnThe long-term expected rate of return on pension System investments was determined using a log-normaldistributionanalysisinwhichbest-estimaterangesofexpectedfuturerealratesofreturn (expected returns, net of pension System investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the 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 pension liability was 6.75%. The projection of cash flows used to determine the discount rate assumed that System member contributions will be made per the VRS Statutes, and the employer contributions will be made in accordance with the VRS funding policy at rates equal to the difference between actuarially determined contribution rates adopted by the VRS Board of Trustees and the member rate. For the year ended June 30, 2024, the employer contribution rate was 100% of the actuarially determined employer contribution rate from the June 30, 2023 actuarial valuations,whicheverwasgreater.FromJuly1,2024on,participatingemployersareassumedto continuetocontribute100%oftheactuariallydeterminedcontributionrates.Basedonthose assumptions,thepensionplansfiduciarynetpositionwasprojectedtobeavailabletomakeall projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return was applied to all periods of projected benefit payments to determine the total pension liability.46'