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Note 11 - Retirement Plans | 12 Months Ended
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Mar. 31, 2023
Notes to Financial Statements |
Retirement Benefits [Text Block] | 11. Retirement Plans The Company has a noncontributory defined benefit pension plan (the “Plan”) covering most employees who meet certain age-entry requirements and work a stated minimum number of hours per year. The Plan was amended to freeze accruals to new hires and rehires effective January 1, 2020. The Plan was adequately funded as of March 31, 2023 and 2022 and no contributions were required to meet legal funding requirements. The following tables provide a reconciliation of the changes in the Plan’s benefit obligation and fair value of plan assets over the two-year period ended March 31, 2023 and a statement of the funded status as of March 31, 2023 and 2022 (in thousands):
|  | Fiscal Year: |
|  | 2023 |  |  | 2022 |
Change in benefit obligation |  |  |  |  |  |  |  |
Benefit obligation at beginning of year |  | $ | 275,001 |  |  | $ | 286,063 |
Service cost |  |  | 7,429 |  |  |  | 8,483 |
Interest cost |  |  | 9,254 |  |  |  | 7,721 |
Actuarial gain |  |  | (47,403 | ) |  |  | (972 | )
Benefit payments and expenses |  |  | (9,243 | ) |  |  | (26,294 | )
Benefit obligation at end of year |  | $ | 235,038 |  |  | $ | 275,001 |
Change in plan assets |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | $ | 327,867 |  |  | $ | 348,914 |
Actual return on plan assets |  |  | (23,169 | ) |  |  | 6,666 |
Benefit payments and expenses |  |  | (10,356 | ) |  |  | (27,713 | )
Fair value of plan assets at end of year |  | $ | 294,342 |  |  | $ | 327,867 |
Funded status |  | $ | 59,304 |  |  | $ | 52,866 |
The Plan’s funded status increased by $6.4 million during fiscal year 2023 reflecting the actual fair value of plan assets and the projected benefit obligation as of March 31, 2023. This funded status increase was primarily driven by actuarial gains on the projected benefit obligation, as described in more detail below, partially offset by a combination of growth in the Plan’s projected benefit obligation due to service cost and interest cost and a negative return on plan assets. During fiscal year 2023, the actuarial gain in the pension plan’s projected benefit obligation was driven by an increase in discount rates and the annual update in plan census data resulting in demographic gains, partially offset by an assumed salary increase rate for fiscal year 2024 in excess of the long-term rate. During fiscal year 2022, the actuarial gain in the pension plan’s projected benefit obligation was primarily driven by an increase in discount rates. The gain was partially offset by actuarial losses due to a combination of data revisions resulting in the demographic losses, a change in near-term assumed salary increases, and an update to the most recently released mortality projection scale by the Society of Actuaries (SOA). Plan assets decreased from $327.9 million as of March 31,2022 to $294.3 million as of March 31, 2023 primarily due to normal payments of benefits and a negative return on plan assets. The following table provides the components of the Plan’s accumulated other comprehensive loss, pre-tax (in thousands):
|  | Fiscal Year: |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Amounts Recognized in Accumulated Other Comprehensive Pre-Tax Loss |  |  |  |  |  |  |  |  |  |  |  |
Prior service cost |  | $ | (75 | ) |  | $ | (167 | ) |  | $ | (258 | )
Net loss |  |  | (28,310 | ) |  |  | (36,136 | ) |  |  | (26,265 | )
Accumulated other comprehensive pre-tax loss |  | $ | (28,385 | ) |  | $ | (36,303 | ) |  | $ | (26,523 | )
The following table provides the components of net periodic benefit cost for the Plan for fiscal years 2023, 2022, and 2021 (in thousands):
|  | Fiscal Year: |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Service cost including administration |  | $ | 8,240 |  |  | $ | 9,508 |  |  | $ | 10,627 |
Interest cost |  |  | 9,254 |  |  |  | 7,721 |  |  |  | 9,266 |
Expected return on plan assets |  |  | (16,104 | ) |  |  | (17,114 | ) |  |  | (15,804 | )
Amortization of net loss |  |  | - |  |  |  | - |  |  |  | 9,919 |
Prior service cost |  |  | 91 |  |  |  | 91 |  |  |  | 91 |
Net periodic benefit cost |  | $ | 1,481 |  |  | $ | 206 |  |  | $ | 14,099 |
The Company utilizes a full yield curve approach in the estimation of net periodic benefit cost components by applying the specific spot rates along the yield curve used in determination of the benefit obligation to their underlying projected cash flows. Prior service costs are amortized on a straight-line basis over the average remaining service period of active participants. Gains and losses in excess of 10% of the greater of the benefit obligation and the market-related value of assets are amortized over the average remaining service period of active participants. The assumptions used to measure the Company’s benefit obligation and pension expense are shown in the following table:
|  | Fiscal Year: |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Weighted Average Assumptions for Balance Sheet Liability at End of Year: |  |  |  |  |  |  |  |  |  |  |  |
Discount rate - projected benefit obligation |  |  | 5.04 | % |  |  | 3.81 | % |  |  | 3.43 | %
Rate of compensation increase |  |  | 3.00 | % |  |  | 3.00 | % |  |  | 3.00 | %
Mortality table |  | Pri-2012 Blue Collar Generational Table Improvement Scale MP-2021 |  |  | Pri-2012 Blue Collar Generational Table Improvement Scale MP-2021 |  |  | Pri-2012 Blue Collar Generational Table Improvement Scale MP-2020 |
Weighted Average Assumptions for Benefit Cost at Beginning of Year: |  |  |  |  |  |  |  |  |  |  |  |
Discount rate - benefit obligations |  |  | 3.81 | % |  |  | 3.43 | % |  |  | 3.69 | %
Discount rate - interest cost |  |  | 3.52 | % |  |  | 2.68 | % |  |  | 3.30 | %
Discount rate - service cost |  |  | 3.93 | % |  |  | 3.75 | % |  |  | 3.87 | %
Expected return on plan assets |  |  | 5.00 | % |  |  | 5.00 | % |  |  | 7.25 | %
Rate of compensation increase |  |  | 3.00 | % |  |  | 3.00 | % |  |  | 3.00 | %
Plan Assets Investment Policy and Strategy - The Company maintains an investment policy that utilizes a liability-driven investments approach to reduce the ongoing volatility of the Plan’s funded status. During fiscal year 2023, the Company updated its current target allocation to be 20% allocated to a diversified mix of return-seeking investments including equities and alternative investments and 80% allocated to liability-hedging fixed income investments. The Company's plan assets consist of the following:
|  | Target Allocation for: |  |  | Percentage of Plan Assets as of: |
|  | Fiscal Year 2024 |  |  | March 31, 2023 |  |  | March 31, 2022 |
Equity securities |  |  | 16 | % |  |  | 13 | % |  |  | 21 | %
Debt securities |  |  | 80 | % |  |  | 75 | % |  |  | 61 | %
Real estate |  |  | 2 | % |  |  | 8 | % |  |  | 7 | %
Cash |  |  | 1 | % |  |  | 1 | % |  |  | 7 | %
Other |  |  | 1 | % |  |  | 3 | % |  |  | 4 | %
Total |  |  | 100 | % |  |  | 100 | % |  |  | 100 | %
The following tables set forth the Company’s plan assets at fair value, by level within the fair value hierarchy (as defined in Note 1), as of March 31, 2023 and 2022, (in thousands):
|  | As of March 31, 2023 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  | ` |  | Subtotal |  |  | Measured at NAV (1) |  |  | Total |
Equity securities |  | $ | 25,045 |  |  | $ | - |  |  | $ | - |  |  |  | $ | 25,045 |  |  | $ | - |  |  | $ | 25,045 |
Held in common/collective trusts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  | - |  |  |  | 12,639 |  |  |  | 12,639 |
Real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  | - |  |  |  | 24,766 |  |  |  | 24,766 |
Debt securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  | - |  |  |  | 219,767 |  |  |  | 219,767 |
Cash/short-term investments (2) |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  | - |  |  |  | 2,799 |  |  |  | 2,799 |
Other investments |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  | - |  |  |  | 9,326 |  |  |  | 9,326 |
Fair value of plan assets |  | $ | 25,045 |  |  | $ | - |  |  | $ | - |  |  |  | $ | 25,045 |  |  | $ | 269,297 |  |  | $ | 294,342 |
|  | As of March 31, 2022 |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  | ` |  | Subtotal |  |  | Measured at NAV (1) |  |  | Total |
Equity securities |  | $ | 29,427 |  |  | $ | - |  |  | $ | - |  |  |  | $ | 29,427 |  |  | $ | - |  |  | $ | 29,427 |
Held in common/collective trusts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  | - |  |  |  | 40,969 |  |  |  | 40,969 |
Real estate |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  | - |  |  |  | 23,200 |  |  |  | 23,200 |
Debt securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  | - |  |  |  | 200,224 |  |  |  | 200,225 |
Cash/short-term investments (2) |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  | - |  |  |  | 22,224 |  |  |  | 22,224 |
Other investments |  |  | - |  |  |  | - |  |  |  | - |  |  |  |  | - |  |  |  | 11,822 |  |  |  | 11,822 |
Fair value of plan assets |  | $ | 29,427 |  |  | $ | - |  |  | $ | - |  |  |  | $ | 29,427 |  |  | $ | 298,439 |  |  | $ | 327,867 |
| (1) | Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy but are included to reconcile to the amounts presented in our Obligations and Funded Status table.
| (2) | The cash/short term investments consist of a money market fund that holds individual, high quality, short duration fixed income investments, however the fund does not trade on public markets. The Company elected to consistently apply the practical expedient to all investments within common/collective trusts, and therefore, the fair value of this fund is measured at net asset value per share.
Expected Return on Plan Assets For fiscal year 2023, the expected long-term rate of return on Plan assets was 5.00%. For fiscal year 2024, the Company will increase the expected long-term rate of return on Plan assets to 6.15%. The Company expected 5.00% and 6.15% to fall within the 35 to 65 percentile range of returns on investment portfolios with asset diversification similar to that of the Plan's target asset allocation for fiscal years 2023 and 2024, respectively. Cash Flows Expected contributions for fiscal year ending March 31, 2024 (in thousands):
Expected Employer Contributions |  | $ | - |
Expected Employee Contributions |  | $ | - |
Estimated future benefit payments reflecting expected future service for the fiscal years ending March 31 (in thousands):
2024 |  |  | $ | 10,706 |
2025 |  |  |  | 11,446 |
2026 |  |  |  | 12,210 |
2027 |  |  |  | 12,975 |
2028 |  |  |  | 13,648 |
2029 | - | 2033 |  |  | 76,496 |
401(k) Plans The Company also has employees’ savings 401(k) plans covering all employees who meet certain age-entry requirements and work a stated minimum number of hours per year. Participants may make contributions up to the legal limit. The Company’s matching contributions are discretionary. Costs charged to operations for the Company’s matching contributions amounted to $1.5 million, $1.1 million, and $1.6 million in fiscal years 2023, 2022, and 2021, respectively. In each of the aforementioned fiscal years, the matching contribution was entirely treasury stock. This stock portion of the matching contribution is valued at current market value while the treasury stock is valued at cost. Unfunded Deferred Compensation Plan The Company sponsors an unfunded nonqualified deferred compensation plan to permit certain eligible employees to defer receipt of a portion of their compensation to a future date. This plan was designed to compensate the plan participants for any loss of company contributions under the 401(k) plans. As of March 31, 2023 and 2022, the Company has accrued $1.7 million and $0.9 million, respectively, in connection with the unfunded deferred compensation plan.

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