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ELK RIVER MUNICIPAL UTILITIES <br />ELK RIVER, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31, 2010 AND 2009 <br />Note 5: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION <br />Plan Description. Elk River Municipal Utilities (the Utilities) administers amulti-employer defined benefit healthcare <br />plan (`the Retiree Health Plad'). The plan provides lifetime healthcare insurance for eligible retirees and their spouses <br />through the Utilities group health insurance plan, which covers both active and retired members. Benefit provisions are <br />reviewed intermittently through the relationship with the Utilities' insurance broker. The Retiree Health Plan does not <br />issue a publicly available financial report. <br />Funding Policy. Contribution requirements also are reviewed a[ the time changes are made to the plan. The Utility <br />contributes none of the cost of current-year premiums for eligible retired plan members and their spouses. For fiscal year <br />2010, [he Utility contributed $0 to the plan Plan members receiving benefits contribute 100 percent of [heir premium <br />costs. In fiscal year 2010, total member contributions were $0. <br />Annual OPEB Cos[ and Net OPEB Obligation. The Utilities' annual other postemployment benefit (OPEB) cost <br />(expense) is calculated based on the annual required contribution of the employer (ARC). The Utility has elected to <br />calculate the ARC and related information using the alternative measurement method permitted by GASB Statement 45 <br />for employers in plans with fewer than one hundred total plan members. The ARC represents a level of funding that, if <br />paid on an ongoing basis, is projected [o cover normal cost each year and to amortize any unfunded actuarial liabilities <br />(or funding excess) over a period no[ to exceed thirty years. The following table shows the components of the Utilities <br />annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the Utilities' net OPEB <br />obligation to the Retiree Health Plan: <br />Annual required contribution <br />Interest on net OPEB obligation <br />Adjustment to annual required contribution <br />Annual OPEB Cost (expense) <br />Contributions made <br />Increase in net OPEB obligation <br />Ne[ OPEB obligation- beginning of year <br />Net OPEB obligation- end of year <br />$ 1Q,213 <br />810 <br />(1,171) <br />9,852 <br />9,853 <br />20,243 <br />$ 30,096 <br />-49- <br />