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Defined Benefit Plan
3 Months Ended
Mar. 31, 2019
Retirement Benefits [Abstract]  
DEFINED BENEFIT PLAN
Defined Benefit Plan
San Jose Water Company sponsors a noncontributory defined benefit pension plan for its eligible employees. Employees hired before March 31, 2008, are entitled to receive retirement benefits using a formula based on the employee’s three highest years of compensation (whether or not consecutive). For employees hired on or after March 31, 2008, benefits are determined using a cash balance formula based on compensation credits and interest credits for each employee. Officers hired before March 31, 2008, are eligible to receive additional retirement benefits under the Executive Supplemental Retirement Plan, and officers hired on or after March 31, 2008, are eligible to receive additional retirement benefits under the Cash Balance Executive Supplemental Retirement Plan. Both plans are non-qualified plans in which only officers and other designated members of management may participate. San Jose Water Company also provides health care and life insurance benefits for retired employees under the San Jose Water Company Social Welfare Plan.
The components of net periodic benefit costs for San Jose Water Company’s pension plan, its Executive Supplemental Retirement Plan, Cash Balance Executive Supplemental Retirement Plan and Social Welfare Plan for the three months ended March 31, 2019, and 2018 are as follows:
 
Three months ended March 31,
 
2019

2018
Service cost
$
1,479

 
1,596

Interest cost
2,112

 
1,877

Other cost
1,118

 
1,133

Expected return on assets
(2,309
)
 
(2,427
)
 
$
2,400

 
2,179


The components of net periodic benefit cost have been recorded in the consolidated statements of comprehensive income as follows:
 
Three months ended March 31,
 
2019
 
2018
Other production expenses
$
370

 
423

Administrative and general expense
838

 
895

Maintenance expense
271

 
278

Pension non-service costs
921

 
583

 
$
2,400

 
2,179


The following tables summarize the fair values of plan assets by major categories as of March 31, 2019, and December 31, 2018: 
 
 
 
Fair Value Measurements at March 31, 2019
 
 
 
 
 
Quoted
Prices in
Active
Markets for
Identical
Assets
 
Significant
Observable
Inputs
 
Significant
Unobservable
Inputs
Asset Category
Benchmark
 
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Cash and cash equivalents
 
$
7,309

 
$
7,309

 
$

 
$

Actively Managed (a):
 
 
 
 
 
 
 
 
 
All Cap Equity
Russell 3000 Value
 
6,373

 
6,331

 
42

 

U.S. Large Cap Equity
Russell 1000, Russell 1000 Growth, Russell 1000 Value
 
54,541

 
54,541

 

 

U.S. Mid Cap Equity
Russell Mid Cap, Russell Mid Cap Growth, Russell Mid Cap Value
 
9,673

 
9,673

 

 

U.S. Small Cap Equity
Russell 2000, Russell 2000 Growth, Russell 2000 Value
 
10,187

 
10,187

 

 

Non-U.S. Large Cap Equity
MSCI EAFE
 
5,502

 
5,502

 

 

REIT
NAREIT - Equity REIT’S
 
6,885

 

 
6,885

 

Fixed Income (b)
(b)
 
46,352

 

 
46,352

 

Total
 
 
$
146,822

 
$
93,543

 
$
53,279

 
$

The Plan has a current target allocation of 55% invested in a diversified array of equity securities to provide long-term capital appreciation and 45% invested in a diversified array of fixed income securities and cash to provide preservation of capital plus generation of income.
(a)
Actively managed portfolio of securities with the goal to exceed the stated benchmark performance.
(b)
Actively managed portfolio of fixed income securities with the goal to exceed the Barclays 1-5 Year Government/Credit, Barclays Intermediate Government/Credit, and Merrill Lynch Preferred Stock Fixed Rate.
 
 
 
Fair Value Measurements at December 31, 2018
 
 
 
 
 
Quoted
Prices in
Active
Markets for
Identical
Assets
 
Significant
Observable
Inputs
 
Significant
Unobservable
Inputs
Asset Category
Benchmark
 
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Cash and cash equivalents
 
$
8,136

 
$
8,136

 
$

 
$

Actively Managed (a):
 
 
 
 
 
 
 
 
 
All Cap Equity
Russell 3000 Value
 
5,670

 
5,632

 
38

 

U.S. Large Cap Equity
Russell 1000, Russell 1000 Growth, Russell 1000 Value
 
47,040

 
47,040

 

 

U.S. Mid Cap Equity
Russell Mid Cap, Russell Mid Cap Growth, Russell Mid Cap Value
 
8,372

 
8,372

 

 

U.S. Small Cap Equity
Russell 2000, Russell 2000 Growth, Russell 2000 Value
 
8,528

 
8,528

 

 

Non-U.S. Large Cap Equity
MSCI EAFE
 
4,969

 
4,969

 

 

REIT
NAREIT - Equity REIT’S
 
5,889

 

 
5,889

 

Fixed Income (b)
(b)
 
44,855

 

 
44,855

 

Total
 
 
$
133,459

 
$
82,677

 
$
50,782

 
$

The Plan has a current target allocation of 55% invested in a diversified array of equity securities to provide long-term capital appreciation and 45% invested in a diversified array of fixed income securities and cash to provide preservation of capital plus generation of income.
(a)
Actively managed portfolio of securities with the goal to exceed the stated benchmark performance.
(b)
Actively managed portfolio of fixed income securities with the goal to exceed the Barclays 1-5 Year Government/Credit, Barclays Intermediate Government/Credit, and Merrill Lynch Preferred Stock Fixed Rate.
In 2019, San Jose Water Company expects to make required and discretionary cash contributions of up to $8,337 to the pension plans and Social Welfare Plan. For the three months ended March 31, 2019, there has been no contributions to such plans.