Employees of the University eligible for retirement benefits participate in one of four retirement plans. Eligible student employees participate in a student retirement plan that is funded solely by contributions from the student employees. The student retirement plan is a defined contribution plan administered by a consortium of higher educational institutions in the State. All other eligible employees of the University participate in one of the three additional plans, PERA plan, the University’s optional retirement plan, and CU Medicine’s retirement plan.

PERA DEFINED BENEFIT PENSION PLAN

Significant Accounting Policies.  The University participates in the State Division Trust Fund (SDTF), a cost-sharing multiple-employer defined benefit pension fund administered by PERA.  The net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, pension expense, information about the fiduciary net position and additions to/deductions from the fiduciary net position of the SDTF have been determined using the economic resources measurement focus and the accrual basis of accounting. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

Plan description.  Eligible employees of the University are provided with pensions through the SDTF.  Plan benefits are specified in Title 24, Article 51 of the C.R.S., administrative rules set forth at 8 C.C.R. 1502-1, and applicable provisions of the federal Internal Revenue Code.  Colorado State law provisions may be amended from time to time by the Colorado General Assembly. PERA issues a publicly available comprehensive annual financial report that can be obtained at www.copera.org/investments/pera-financial-reports.

The University of Colorado has both classified and non-classified employees.  All classified employees participate in PERA.  Prior to legislation passed during the 2006 session, higher education employees had the option to participate in social security, PERA’s defined benefit plan, or the institution’s optional retirement plan.  Currently, the University’s employees, except classified employees, are required to participate in their institution’s optional plan, if available, and social security unless they are active or inactive members of PERA with at least one year of service credit.  In that case, they may elect either PERA or their institution’s optional plan.

Benefits provided as of December 31, 2017.  PERA provides retirement, disability, and survivor benefits. Retirement benefits are determined by the amount of service credit earned and/or purchased, highest average salary, the benefit structure(s) under which the member retires, the benefit option selected at retirement, and age at retirement. Retirement eligibility is specified in tables set forth at C.R.S. § 24-51-602, 604, 1713, and 1714.

The lifetime retirement benefit for all eligible retiring employees under the PERA benefit structure is the greater of the:

• Highest average salary multiplied by 2.5 percent and then multiplied by years of service credit.
• The value of the retiring employee’s member contribution account plus a 100 percent match on eligible amounts as of the retirement date. This amount is then annuitized into a monthly benefit based on life expectancy and other actuarial factors.

In all cases the service retirement benefit is limited to 100 percent of highest average salary and also cannot exceed the maximum benefit allowed by the federal Internal Revenue Code.

Members may elect to withdraw their member contribution accounts upon termination of employment with all PERA employers; waiving rights to any lifetime retirement benefits earned. If eligible, the member may receive a match of either 50 percent or 100 percent on eligible amounts depending on when contributions were remitted to PERA, the date employment was terminated, whether 5 years of service credit has been obtained and the benefit structure under which contributions were made.

As of December 31, 2017, benefit recipients who elect to receive a lifetime retirement benefit are generally eligible to receive post-retirement cost-of-living adjustments, referred to as annual increases in the C.R.S. Benefit recipients under the PERA benefit structure who began eligible employment before January 1, 2007 receive an annual increase of 2 percent, unless PERA has a negative investment year, in which case the annual increase for the next three years is the lesser of 2 percent or the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the prior calendar year. Benefit recipients under the PERA benefit structure who began eligible employment after January 1, 2007 receive an annual increase of the lesser of 2 percent or the average CPI-W for the prior calendar year, not to exceed 10 percent of PERA’s Annual Increase Reserve (AIR) for the SDTF.

Disability benefits are available for eligible employees once they reach five years of earned service credit and are determined to meet the definition of disability.  The disability benefit amount is based on the retirement benefit formula shown above considering a minimum 20 years of service credit, if deemed disabled.

Survivor benefits are determined by several factors, which include the amount of earned service credit, highest average salary of the deceased, the benefit structure(s) under which service credit was obtained, and the qualified survivor(s) who will receive the benefits.

Contributions as of June 30, 2018.  Eligible employees and the University are required to contribute to the SDTF at a rate set by Colorado statute. The contribution requirements are established under C.R.S. § 24-51-401, et seq. Eligible employees are required to contribute 8 percent of their PERA-includable salary. Table 15.1 summarizes the employer contribution requirements for all employees.

Table 15.1. Employer Contribution Requirements

	2018	2017
	1-1-17 to 06-30-18	1-1-17 to 6-30-17	7-1-16 to 12-31-16
Employer Contribution Rate*	10.15%	10.15%	10.15%
Amount of Employer Contribution Apportioned to the Health Care Trust Fund as specified in C.R.S. Section 24-51-208(1)(f)	-1.02%	-1.02%	-1.02%
Amount Apportioned to the SDTF	9.13%	9.13%	9.13%
Amortization Equalization Disbursement (AED) as specified in C.R.S. Section 24-51-411	5.00%	5.00%	4.60%
Supplemental Amortization Equalization Disbursement (SAED) as specified in C.R.S., Section 24-51-411	5.00%	5.00%	4.50%
Total Employer Contribution Rate to the SDTF	19.13%	19.13%	18.23%
*Rates are expressed as a percentage of salary as defined in C.R.S. §24-51-101(42).

Employer contributions are recognized by the SDTF in the period in which the compensation becomes payable to the member and the University is statutorily committed to pay the contributions to the SDTF. Employer contributions recognized by the SDTF from the University were $61,138,000 for the year ended June 30, 2018 and $58,698,000 for the year ended June 30, 2017.

As of June 30, 2018 and 2017, the University reported a liability of $2,206,541,000 and $2,049,366,000, respectively, for its proportionate share of the net pension liability. The net pension liability for Fiscal Year 2018 was measured as of December 31, 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of December 31, 2016.  Standard update procedures were used to roll forward the total pension liability to December 31, 2017.  The University’s proportion of the net pension liability was based on the University’s contributions to the SDTF for the calendar year 2017 and 2016 relative to the total contributions of participating employers to the SDTF.  At December 31, 2017, the University’s proportion was 11.02 percent, which decreased from 11.16 percent at December 31, 2016.

For the years ended June 30, 2018 and 2017, the University recognized pension expense of $496,627,000 and $415,537,000.  Table 15.2 details the sources of the University’s deferred outflows of resources and deferred inflows of resources related to pensions at June 30, 2018 and 2017.

Table 15.2. Deferred Inflows and Deferred Outflows of Resources Related to Pension (in thousands)

		2018		2017
		Deferred Outflows of Resources	Deferred Inflows of Resources	Deferred Outflows of Resources	Deferred Inflows of Resources
Difference between expected and actual experience	$	34,405	-	20,371	-
Changes of assumptions or other inputs		383,140	-	521,372	6,308
Net difference between projected and actual earnings on pension plan investments		-	83,106	67,937	-
Changes in proportionate share		-	11,150	-	3,321
Changes in proportionate share of contributions		-	1,308	-	-
Contributions subsequent to the measurement date		31,428	-	31,670	-
Total	$	448,973	95,564	641,350	9,629

The $31,428,000 reported as a deferred outflow of resources related to pensions as of June 30, 2018, resulting from contributions subsequent to the measurement date, will be recognized as a reduction of net pension liability in Fiscal Year 2019.  The $31,670,000 reported as deferred outflows of resources related to pensions as of June 30, 2017, resulting from contributions subsequent to the measurement date, was recognized as a reduction of the net pension liability in Fiscal Year 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as detailed in Table 15.3.

Table 15.3. Future Amortization of Deferred Outflows and Deferred Inflows (in thousands)

Years ending June 30:
2019	$	325,778
2020		58,906
2021		(30,995)
2022		(31,708)
Total	$	321,981

Actuarial assumptions.  The total pension liability in the December 31, 2016 actuarial valuation was determined using the actuarial cost method, actuarial assumptions and other inputs detailed in Table 15.4.

Table 15.4. Actuarial Assumptions – December 31, 2016

Actuarial cost method	Entry age
Price inflation	2.40 percent
Real wage growth	1.10 percent
Wage inflation	3.50 percent
Salary increases, including wage inflation	3.50 - 9.17 percent
Long-term investment rate of return, net of pension plan investment expenses, including price inflation	7.25 percent
Discount rate	5.26 percent
Post-retirement benefit increases:
PERA benefit structure hired prior to 1/1/07; and DPS benefit structure (automatic)	2.00 percent
PERA benefit structure hired after 12/31/06; (ad hoc, substantively automatic)	Financed by the AIR

A discount rate of 4.72 percent was used in the rollforward calculation of the total pension liability to the measurement date of December 31, 2017. The discount rate of 5.26 percent was used for the measurement date of December 31, 2016.

Healthy mortality assumptions for active members reflect the RP-2014 White Collar Employee Mortality Table, a table specifically developed for actively working people. To allow for an appropriate margin of improved mortality prospectively, the mortality rates incorporate a 70 percent factor applied to male rates and a 55 percent factor applied to female rates.

Healthy, post-retirement mortality assumptions reflect the RP-2014 Healthy Annuitant Mortality Table, adjusted as follows:

• Males: Mortality improvement projected to 2018 using the MP-2015 projection scale, a 73 percent factor applied to rates for ages less than 80, a 108 percent factor applied to rates for ages 80 and above, and further adjustments for credibility.
• Females: Mortality improvement projected to 2020 using the MP-2015 projection scale, a 78 percent factor applied to rates for ages less than 80, a 109 percent factor applied to rates for ages 80 and above, and further adjustments for credibility.

For disabled retirees, the mortality assumption was changed to reflect 90 percent of the RP-2014 Disabled Retiree Mortality Table.

The actuarial assumptions used in the December 31, 2016 valuations were based on the results of the 2016 experience analysis for the periods January 1, 2012 through December 31, 2015 as well as the October 28, 2016 actuarial assumptions workshop and were adopted by the PERA Board during the November 18, 2016 Board meeting.

The long-term expected return on plan assets is reviewed as part of regular experience studies prepared every four or five years for PERA. Recently, this assumption has been reviewed more frequently. The most recent analyses were outlined in presentations to PERA’s Board on October 28, 2016.

Several factors were considered in evaluating the long-term rate of return assumption for the SDTF, including long-term historical data, estimates inherent in current market data, and a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected return, net of investment expense and inflation) were developed by the investment consultant for each major asset class. These ranges were 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 then adding expected inflation.

As of the most recent adoption of the long-term expected rate of return by the PERA Board, the target allocation and best estimates of geometric real rates of return for each major asset class are summarized in Table 15.5.

Table 15.5. Target Allocation and Expected Rate of Return

Asset Class	Target Allocation	30 Year Expected Geometric Real Rate of Return
U.S. Equity - Large Cap	21.20%	4.30%
U.S. Equity - Small Cap	7.42	4.80
Non U.S. Equity - Developed	18.55	5.20
Non U.S. Equity - Emerging	5.83	5.40
Core Fixed Income	19.32	1.20
High Yield	1.38	4.30
Non U.S. Fixed Income - Developed	1.84	0.60
Emerging Market Debt	0.46	3.90
Core Real Estate	8.50	4.90
Opportunity Fund	6.00	3.80
Private Equity	8.50	6.60
Cash	1.00	0.20
Total	100.00%

In setting the longer term expected rate of return, projections employed to model future returns provide a range of expected long-term returns that, including expected inflation, ultimately support a long-term expected rate of return assumption of 7.25 percent.

Discount rate.  Per PERA, the discount rate used to measure the total pension liability at December 31, 2017 was 4.72 percent, and 5.26 percent for the December 31, 2016 valuation. The projection of cash flows used to determine the discount rate applied the actuarial cost method and assumptions shown above. In addition, the following methods and assumptions were used in the projection of cash flows:

• Total covered payroll for the initial projection year consists of the covered payroll of the active membership present on the valuation date and the covered payroll of future plan members assumed to be hired during the year. In subsequent projection years, total covered payroll was assumed to increase annually at a rate of 3.50 percent.
• Employee contributions were assumed to be made at the current member contribution rate. Employee contributions for future plan members were used to reduce the estimated amount of total service costs for future plan members.
• Employer contributions were assumed to be made at rates equal to the fixed statutory rates specified in law and effective as of the measurement date, including current and estimated future AED and SAED, until the actuarial value funding ratio reaches 103 percent, at which point, the AED and SAED will each drop 0.50 percent every year until they are zero. Additionally, estimated employer contributions included reductions for the funding of the AIR and retiree health care benefits. For future plan members, employer contributions were further reduced by the estimated amount of total service costs for future plan members not financed by their member contributions.
• Employer contributions and the amount of total service costs for future plan members were based upon a process used by the plan to estimate future actuarially determined contributions assuming an analogous future plan member growth rate.
• The AIR balance was excluded from the initial fiduciary net position, as, per statute, AIR amounts cannot be used to pay benefits until transferred to either the retirement benefits reserve or the survivor benefits reserve, as appropriate. As the ad hoc post-retirement benefit increases financed by the AIR are defined to have a present value at the long-term expected rate of return on plan investments equal to the amount transferred for their future payment, AIR transfers to the fiduciary net position and the subsequent AIR benefit payments have no impact on the Single Equivalent Interest Rate (SEIR) determination process when the timing of AIR cash flows is not a factor (i.e., the plan’s fiduciary net position is not projected to be depleted). When AIR cash flow timing is a factor in the SEIR determination process (i.e., the plan’s fiduciary net position is projected to be depleted), AIR transfers to the fiduciary net position and the subsequent AIR benefit payments were estimated and included in the projections.
• Benefit payments and contributions were assumed to be made at the end of the month.

Based on the above assumptions and methods, the projection test indicates the SDTF’s fiduciary net position was projected to be depleted in 2038 and, as a result, the municipal bond index rate was used in the determination of the discount rate. The long-term expected rate of return of 7.25 percent on pension plan investments was applied to periods through 2038 and the municipal bond index rate, the December average of the Bond Buyer General Obligation 20-year Municipal Bond Index published weekly by the Bond Buyer, was applied to periods on and after 2038 to develop the discount rate. For the measurement date, the municipal bond index rate was 3.43 percent, resulting in a blended discount rate of 4.72 percent.

As of the prior measurement date, the long-term expected rate of return on plan investments of 7.25 percent and the municipal bond index rate of 3.86 percent were used in the discount rate determination resulting in a discount rate of 5.26, 0.54 percentage points higher compared to the current measurement date.

Table 15.6 presents the proportionate share of the net pension liability calculated using the discount rate of 4.72 percent for 2018 and 5.26 percent for 2017, as well as what the proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than those rates.

Table 15.6. Sensitivity of the University’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate (in thousands)

	2018
	1% Decrease (6.50%)	Current Discount Rate (7.50%)	1% Increase (8.50%)
Proportionate share of the net pension liability	$2,745,095	2,206,541	1,764,421
	2017
	1% Decrease (4.26%)	Current Discount Rate (5.26%)	1% Increase (6.26%)
Proportionate share of the net pension liability	$2,538,266	2,049,366	1,647,227

Detailed information about the SDTF’s fiduciary net position is available in PERA’s comprehensive annual financial report which can be obtained at www.copera.org/investments/pera-financial-reports.

LEGISLATIVE CHANGES TO PERA’S DEFINED BENEFIT PLAN

During the 2018 legislative session, the Colorado General Assembly passed significant pension reform through Senate Bill (SB) 18-200: Concerning Modifications to the Public Employees’ Retirement Association Hybrid Defined Benefit Plan Necessary to Eliminate with a High Probability the Unfunded Liability of the Plan Within the Next Thirty Years. The bill was signed into law by Governor Hickenlooper on June 4, 2018. SB 18-200 makes changes to the plans administered by PERA with the goal of eliminating the unfunded actuarial accrued liability of the Division Trust Funds and thereby reach a 100 percent funded ratio for each division within the next 30 years.

A brief description of some of the major changes to plan provisions required by SB 18-200 are listed below. A full copy of the bill can be found online at www.leg.colorado.gov.

• Increases employer contribution rates by 0.25 percent on July 1, 2019.
• Increases employee contribution rates by a total of 2 percent (to be phased in over a period of 3 years starting on July 1, 2019).
• Directs the state to allocate $225 million each year to PERA starting on July 1, 2018. A portion of the direct distribution will be allocated to the SDTF based on the proportionate amount of annual payroll of the SDTF to the other divisions eligible for the direct distribution.
• Modifies the retirement benefits, including temporarily suspending and reducing the annual increase for all current and future retirees, modifying the highest average salary for employees with less than five years of service credit on December 31, 2019 and raises the retirement age for new employees.
• Member contributions, employer contributions, the direct distribution from the state, and the annual increases will be adjusted based on certain statutory parameters beginning July 1, 2020, and then each year thereafter, to help keep PERA on path to full funding in 30 years.
• Expands eligibility to participate in the PERA DC Plan to new members hired on or after January 1, 2019, who are classified college and university employees in the State Division. Beginning January 1, 2021, and every year thereafter, employer contribution rates for the SDTF will be adjusted to include a defined contribution supplement based on the employer contribution amount paid to defined contribution plan participant accounts that would have otherwise gone to the defined benefit trusts to pay down the unfunded liability plus any defined benefit investment earnings thereon.

At June 30, 2018, the University reported a liability of $2,206,541,000 for its proportionate share of the net pension liability which was measured using the plan provisions in effect as of the pension plan’s year-end based on a discount rate of 4.72 percent. For comparative purposes, the following schedule presents an estimate of what the University’s proportionate share of the net pension liability and associated discount rate would have been had the provisions of SB 18-200, applicable to the SDTF, become law on December 31, 2017. This pro forma information was prepared using the fiduciary net position of the SDTF as of December 31, 2017. Future net pension liabilities reported could be materially different based on changes in investment markets, actuarial assumptions, plan experience and other factors.  Table 15.7 depicts the impact of this new legislation.

Table 15.7. Impact of Legislative Changes in PERA (in thousands)

Estimated Discount Rate Calculated Using Plan Provisions (pro forma)	Proportionate Share of the Estimated Net Position Liability Calculated Using Plan Provisions Required by SP 18-200 (pro forma)
7.25%	$1,046,326

Recognizing that the changes in contribution and benefit provisions also affect the determination of the discount rate used to calculate proportionate share of the net pension liability, approximately $984,654,000 of the estimated reduction is attributable to the use of a 7.25 percent discount rate.

PERA DEFINED CONTRIBUTION PLAN

Employees of the University that are also members of the SDTF may voluntarily contribute to the Voluntary Investment Program, an Internal Revenue Code Section 401(k) defined contribution plan administered by PERA. Title 24, Article 51, Part 14 of the C.R.S., as amended, assigns the authority to establish the Plan provisions to the PERA Board of Trustees. PERA issues a publicly available comprehensive annual financial report for the Program. That report can be obtained at www.copera.org/investments/pera-financial-reports.  The Voluntary Investment Program is funded by voluntary member contributions up to the maximum limits set by the Internal Revenue Service, as established under Title 24, Article 51, Section 1402 of the C.R.S., as amended.  The employees’ contributions to this 401(k) plan approximated $4,811,000 and $4,506,000 for the years ended June 30, 2018 and 2017, respectively.

PERA DEFERRED COMPENSATION PLAN

The PERA Deferred Compensation Plan (457) was established July 1, 2009, as a continuation of the State’s deferred compensation plan, which was established for state and local government employees in 1981.  At July 1, 2009, the State’s administrative functions for the 457 plan were transferred to PERA, where all costs of administration and funding are borne by the plan participants. In calendar year 2017, participants were allowed to make contributions of up to 100 percent of their annual gross salary (reduced by their 8 percent PERA contribution) to a maximum of $18,000.  Participants who are age 50 and older, and contributing the maximum amount allowable, were allowed to make an additional $6,000 contribution in 2017 for total contributions of $24,000.  Participants are also eligible for the special 457 plan catch-up beginning the last three years immediately preceding the participant’s normal retirement age.  Contributions and earnings made by CU employees are tax deferred, although the 457 plan does permit a Roth option. At December 31, 2017, the 457 plan had 18,211 participants.  The University employees’ contributions to the 457 plan approximated $17,725,000 and $14,457,000 for the years ended June 30, 2018 and 2017, respectively.

UNIVERSITY OPTIONAL RETIREMENT PLAN

Under the University’s optional retirement plan (ORP), certain members of the University are required to participate in a defined contribution retirement plan administered by the University for the benefit of full-time faculty and exempt staff members. The State constitution assigns the authority to establish and amend plan provisions to the Regents. The contribution requirements of plan members and the University are established and may be amended by the Regents. Generally, employees are eligible for participation in the ORP upon hire and are vested immediately upon participation.

For the years ended June 30, 2018 and 2017, the University’s contribution to the defined contribution retirement plan was equal to 10 percent of covered payroll, and the employee contribution was equal to 5 percent of covered payroll. The University’s contribution under the ORP approximated $152,606,000 and $128,523,000 during the years ended June 30, 2018 and 2017, respectively. The employees’ contribution under the ORP approximated $76,182,000 and $64,107,000 during the years ended June 30, 2017 and 2016, respectively.

Participants in the University’s ORP choose to invest all contributions with one or more of three designated vendors. In addition, participants in the University’s ORP are covered under federal Social Security. Federal Social Security regulations require both the employer and employee to contribute a percentage of covered payroll to Social Security.

UNIVERSITY VOLUNTARY RETIREMENT SAVINGS PLAN

The University provides a voluntary retirement savings plan to most employees referred to as a 403(b) plan.  Employee salary deferrals into the 403(b) plan are made before income tax is paid and allowed to grow tax-deferred until the money is taxed as income when withdrawn from the plan.  For calendar year 2017 and 2016, the plan had a contribution limit of $18,000.  In addition, the plan allowed catch-up contributions of $6,000.  The plan is administered by the University and the benefit terms are established and can be amended under the Employee Retirement Income Security Act (ERISA).  The employees’ contributions to this 403(b) plan approximated $48,640,000 and $40,551,000 for the years ended 2018 and 2017, respectively.

ALTERNATE MEDICARE PLAN

The University provides an Alternate Medicare Plan (AMP) to retirees aged 65 and over.  The AMP was established by the University who also administers and has the authority to amend benefits.  The AMP is available to the employee and eligible spouse/same gender domestic partner.  Coverage is not provided for dependent children.  The AMP is a single-employer defined benefit pension plan.  The AMP provides a monthly cash payment of approximately $154 for a retiree in both Fiscal Year 2018 and 2017, approximately $262 for a retiree plus spouse/same gender domestic partner in both Fiscal Year 2018 and 2017, and approximately $108 for a surviving spouse in both Fiscal Year 2018 and 2017, to offset medical plan costs for non-university Medicare Risk or Medicare-Eligible plan.  No retiree contribution is permitted.  As these monthly cash payments are not restricted as to use, they are considered a pension rather than a postemployment benefit.  The University adopted the provisions of GASB Statement No. 73 Accounting and Financial Reporting for Pensions and Related Assets that are not within the Scope of GASB Statement No. 68, as amended (Statement No. 73) in Fiscal Year 2017.

Funded Status and Funding Progress.  There are no assets accumulating in a trust for the AMP as the University funds this program on a pay-as-you-go basis.  The University contributed $1,566,000 and $1,436,000 for the years ended June 30, 2018 and 2017, respectively.

The actuarial valuation for the fiscal year ending June 30, 2018 had a measurement date of June 30, 2017.  Based on March 1, 2017 census data, there were 12,410 participants in the AMP plan, with 11,833 active employees and 577 retirees.  In addition to the retirees in payment status, there were 204 retirees receiving benefits through the OPEB plan who are eligible for AMP benefit upon reaching Medicare eligibility.

The actuarial valuation for the fiscal year ending June 30, 2017 had a measurement date of June 30, 2016.  Based on March 1, 2015 census data, there were 11,690 participants in the AMP plan, with 11,183 active employees and 507 retirees.  In addition to the retirees in payment status, there were 175 retirees receiving benefits through the OPEB plan who are eligible for AMP benefit upon reaching Medicare eligibility.

The University recognized $5,426,000 and $5,431,000 of AMP expense in Fiscal Year 2018 and 2017, respectively. Table 15.8 details the changes in the AMP liability during Fiscal Years 2018 and 2017.

Table 15.8. Reconciliation of AMP Liability (in thousands)

		Fiscal Year Ending June 30
		2018	2017
AMP liability, beginning of year	$	74,723	11,600
Cumulative effect of adoption of new accounting principle		-	46,640
Contributions made subsequent to the measurement date		-	1,349
Changes recognized for the fiscal year:
Service cost		4,262	3,194
Interest on total AMP liaibility		2,231	2,391
Differences between expected and actual experience		(3,377)	(101)
Changes of assumption		(3,180)	10,999
Estimated benefit payments		(1,448)	(1,349)
Net changes		(1,512)	15,134
AMP liability, end of year	$	73,211	74,723

Actuarial Methods and Assumptions.  Actuarial valuations of an ongoing program involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future.  Examples include assumptions about retirement rates, withdrawal rates, mortality rates, and participation rates.  The entry age normal actuarial cost method is used.  The discount rate used in the valuation is 3.60 percent as of the June 30, 2017 measurement date, and 2.85 percent as of the June 30, 2016 measurement date, and is based on the Bond Buyer General Obligation 20-Bond Municipal Bond Index.  The RP-2014 Healthy Annuitant Mortality Table with adjustments for credibility and gender adjustments of a 73 percent factor applied to the rates for ages below 80 and a 108 percent factors applied to the rates for ages 80 and above, projected to2018 using the MP-2015 projection scale for males, and a 78 percent factor applied to the rates for ages below 80 and a 109 percent factor applied to the rates for ages 80 and above, projected to 2020 using the MP-2015 projection scale for females.

The valuation reflects the following assumption changes from the June 30, 2016 measurement date to the June 30, 2017 measurement date:

• Interest rate changed from 2.85 percent to 3.60 percent
• Spouse age differential changed from zero years for males and females to spouses two years younger for males and one year older for females
• Spouse coverage assumption changed from 54 percent for males and 22 percent for females to 60 percent for males and 40 percent for females
• The following assumptions were updated based on the December 31, 2015 Colorado PERA assumption study:
  • Mortality rates
  • Withdrawal rates

Table 15.9 illustrates the impact of interest rate sensitivity on the AMP liability for the fiscal years ending June 30, 2018 and 2017.

Table 15.9. Sensitivity of AMP Liability (in thousands)

Fiscal Year Ended June 30		1% Increase (4.60%)	Current Rate (3.60%)	1% Decrease (2.60%)
2018	$	62,639	73,211	86,429
		1% Increase (3.85%)	Current Rate (2.85%)	1% Decrease (1.85%)
2017	$	63,725	74,723	88,499

Table 15.10 illustrates the deferred outflows and inflows of resources as of June 30, 2018 and 2017.

Table 15.10. AMP Deferred Outflows and Inflows (in thousands)

		2018		2017
		Deferred Outflows	Deferred Inflows	Deferred Outflows	Deferred Inflows
Changes in assumptions	$	8,411	2,806	9,705	-
Differences between expected and actual experience		-	3,057	-	89
Contributions subsequent to the measurement date		1,566	-	1,436	-
Total	$	9,977	5,863	11,141	89

Between the June 30, 2017 and 2016 measurement dates of the total AMP liability and the University’s June 30, 2018 and 2017 reporting dates, the University made contributions of $1,566,000 and $1,436,000 during Fiscal Year 2018 and 2017, respectively, that impacted the total AMP liability and were treated as a deferred outflow of resources.

Table 15.11 lists the amortization bases included in the deferred outflows and inflows of resources as of June 30, 2018 and 2017.

Table 15.11. Amortization of AMP Deferred Outflows and Inflows (in thousands)

		Period			Balance
Date Established	Type of Base	Original	Remaining		Original	Remaining	Annual Amortization
July 1, 2016	Differences between expected and actual experience	8.5	6.5	$	(101)	(77)	(12)
July 1, 2016	Changes in assumptions	8.5	6.5		10,999	8,411	1,294
July 1, 2017	Differences between expected and actual experience	8.5	7.5		(3,377)	(2,980)	(397)
July 1, 2017	Changes in assumptions	8.5	7.5		(3,180)	(2,806)	(374)
	Total changes			$	4,341	2,548	511

The deferred outflow from contributions subsequent to the measurement date of $1,566,000 and $1,436,000 will be recognized as a reduction to the AMP liability in the year ended June 30, 2019 and 2018, respectively.  Other amounts reported as deferred outflows and inflows related to the AMP liability will be recognized in AMP expense as summarized in Table 15.12.

Table 15.12. Future Amortization of AMP Deferred Outflows and Inflows (in thousands)

Years ending June 30:
2019	$	511
2020		511
2021		511
2022		511
2023		511
2024-2024		(7)
Total	$	2,548

EARLY RETIREMENT INCENTIVE PROGRAM

The University provides an early retirement incentive program (ERIP) to tenured professors who are at least 55 years of age and whose age and years of service total at least 70. These professors must also be participants in the University’s ORP. The ERIP provides eligible participants with an incentive equal to twice the professor’s base salary and supplemental pay. In return, the participants will retire and relinquish tenure immediately. There were 40  and 70 participants as of June 30, 2018 and 2017, respectively. Benefits under the ERIP are payable over a five-year period. Participation in this program does not impact the Optional Retirement Plan or OPEB. The liability as of June 30, 2018 and 2017 was $4,077,000 and $4,602,000, respectively, measured at a discounted present value using a rate of 5 percent. Table 15.13 presents changes in the ERIP for the years ended June 30, 2018 and 2017.

Table 15.13. Early Retirement Incentive Program (in thousands)

		2018	2017
Beginning of year	$	4,602	7,222
Additions		1,047	-
Reductions		(1,572)	(2,620)
End of year	$	4,077	4,602
Current ERIP		1,686	1,624

CU MEDICINE RETIREMENT PLAN

CU Medicine sponsors a defined contribution retirement plan for its permanent employees that is administered by the Teachers Insurance Annuities Association’s College Retirement Equities Fund. The board of directors for CU Medicine has the authority to amend plan provisions. Employees are eligible for participation in the plan after completing one year of service. On behalf of eligible employees, CU Medicine contributed an amount equal to 7 percent of eligible employees’ salaries for the years ended June 30, 2018 and 2017. CU Medicine’s contributions for covered payroll to the retirement plan for the years ended June 30, 2018 and 2017, approximated $2,005,000 and $1,983,000, respectively.

HEALTH INSURANCE PROGRAMS

The University’s contributions to its various health insurance programs approximated $230,759,000 and $191,461,000 during the years ended June 30, 2018 and 2017, respectively.  See Note 18 for discussion of the Trust.