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0 CITY OF ELK RIVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 3l, 2010 Note 4: OTHER INFORMATION -CONTINUED Life Expectancy -Life expectancies were based on mortality tables from the National Center for Health Statistics. The 2000 United States Life Tables for Males and for Females were used. Turnover -Non-group-specific age-based turnover data from GASB Statement 45 were used as the basis for assigning active member a probability of remaining employed until the assumed retirement age and for developing an expected future working lifetime assumption for purposes of allocating to periods the present value of total benefits to be paid. Healthcare cost trend rate -The expected rate of increase in healthcare insurance premiums was based on projections of the Office of the Actuary at the Centers for Medicare & Medicaid Services. A rate of 10% initially, reduced to an ultimate rate of 5% after ten years, was used. Health insurance premiums - 2008 health insurance premiums for retirees were used as the basis for calculation of the present value of total benefits to be paid. Withdrawal -The probability that an employee will remain employed until the assumed retirement age was determined using non-group specific age-based turnover data provided in Table 1 in Paragraph 35b of GASB 45. Actuarial Method -Projected Unit Credit with 30-year amortization of the unfunded liability. For the URHP, a discount rate of 4% was used based on the historical and expected returns of the Utilities' short-term investment portfolio. In addition, a simplified version of the entry age actuarial cost method was used. The unfunded actuarial accrued liability is being amortized as a level dollar amount over an open basis. The remaining amortization period at December 31, 2010, was thirty years. F. Accounting Change and Restatement of Prior Year's Fund Balance GASB Statement 54 "Fund Balance Reporting and Governmental Fund Type Definitions" enhances the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. The City early implemented this standard for fiscal year 2010. Changes to the government fund type fund balance reporting is reflected in the financial statements and schedules and related disclosures are included in Note 1 and Note 3H. ' The implementation of GASB Statement 54 resulted in the reclassification of certain funds and restatement of the City's financial statements. This statement had the following effect on fund balances of the major and nonmajor funds as they were previously reported: ' General Improvement Projects Nonmajor Governmental Funds ' Total Governmental Funds Fund Balance at December 3 I , 2009 $ 5,699,575 4,120,068 20,360,740 Reclassification Fund Balance at of Fund due to December 31, 2009 GASB 54 $ 141,024 as Restated $ 5,840,599 - 4,120,068 (141,024) 20,219,716 $ 30,]80,383 S - $ 30,180,383 ' 63