Employee Benefits

12 Months Ended

Jun. 30, 2023

12. EMPLOYEE BENEFITS

Defined Contribution Plan —SunLink has a defined contribution plan pursuant to IRS Section 401(k) covering substantially all employees. SunLink matches a specified percentage of the employee’s contribution as determined periodically by its management. No match was provided for the fiscal years ended June 30, 2023 and 2022, respectively. Plan expense for the defined contribution plan was $0 for the years ended June 30, 2023 and 2022.

Defined Benefit Plans —No defined benefit plan is currently maintained for employees of SunLink, the Healthcare Services segment or the Pharmacy segment. Prior to 1997, SunLink maintained a defined benefit retirement plan covering substantially all of its domestic employees. Effective February 28, 1997, SunLink amended its domestic retirement plan to freeze participant benefits and closed the plan to new participants. Benefits under the frozen plan are based on years of service and level of earnings. SunLink funds the frozen plan, which is noncontributory, at a rate that meets or exceeds the minimum amounts required by the Employee Retirement Income Security Act of 1974. Since the sale of SunLink’s life sciences and engineering segment businesses in the fiscal year ended March 31, 1999, net pension expense has been classified as an expense of discontinued operations.

At June 30, 2023, the plan’s assets were invested 27% in cash and short-term investments, 56% in equity investments and 17% in fixed income investments. The plan’s current investment policy of primarily investing in cash and short-term investments is based on the possible need for immediate liquidity as benefits are paid and participants withdraw from the plan. The expected return on investment of 4% is based upon the plan’s historical return on assets. The plan expects to pay $30, $125, $37, $45, and $45 in pension benefits in the years ending June 30, 2024 through 2028, respectively. The plan expects to pay $268 in pension benefits for the years June 30, 2029 through 2033 in the aggregate. This assumes the plan participants elect to take monthly pension benefits as opposed to a lump sum payout when they reach age 65. The Company made contributions of $88 to the plan during the year ended June 30, 2023 and contributions of $100 to the plan during the year ended June 30,2022, respectively, and plans to make a contribution of $100 to the plan for the year ended June 30, 2024. The fair value of the plan assets at June 30, 2023 were $848, of which $614 is classified as a Level 2 investment within the valuation hierarchy and $234 is classified as a Level 3 investment within the valuation hierarchy

The components of net pension expense for all plans (comprised solely of one domestic plan) were as follows for the fiscal years ended June 30, 2023 and 2022:


	2023			2022
Service cost	$	0		$	0
Interest cost		52			42
Expected return on assets		(43	)		(44	)
Amortization of prior service cost		0			46
Settlement cost		(8	)		0
Net pension expense	$	1		$	44
Weighted-average assumptions:
Discount rate		4.50	%		2.80	%
Expected return on plan assets		4.00	%		4.00	%
Rate of compensation increase		0.00	%		0.00	%

Summary information for the plans (comprised solely of one domestic plan) is as follows for the fiscal years ended June 30, 2023 and 2022:


	2023			2022
Change in Benefit Obligation:
Benefit obligation at beginning of year	$	1,172		$	1,535
Interest cost		52			42
Actuarial (gain) loss		(67	)		(378	)
Benefits paid		(332	)		(27	)
Effect of settlements		23			0
Benefit obligation end of year	$	848		$	1,172
Change in Fair Value of Plan Assets:
Beginning fair value	$	1,041		$	1,080
Actual return (loss) on plan assets		51			(112	)
Employer contribution		88			100
Benefits paid		(332	)		(27	)
Plan assets at end of year	$	848		$	1,041
Funded status of the plans		0			(131	)
Unrecognized actuarial (gain) loss		(20	)		24
Accrued benefit cost	$	(20	)	$	(107	)
Amounts Recognized in Consolidated Balance Sheets
Accrued benefit cost		(20	)		(107	)
Accumulated other comprehensive (gain) loss*		(20	)		24
Net amount recognized	$	0		$	(131	)

* Accumulated other comprehensive loss represents minimum pension liability adjustments.