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CITY OF ELK RIVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2011 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 8.5% initially, reduced to an ultimate rate of 5% after seven years, was used. Health insurance premiums — 2011 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 I 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, the project unit credit 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, 2011 was thirty years. F. Change in Accounting Principle In 2008, with the implementation of GASB Statement 45 "Accounting and Financial Reporting by Employers.for Postemployment Benefits Other Than Pensions ", the City amortized the MRHP unfunded actuarial accrued liability over a period of one year. With the most recent actuarial valuation conducted in 2011 the City is now amortizing the unfunded actuarial accrued liability over a period of thirty years due to the recalculated actuarial valuation. G. Segment Information The City maintains five enterprise funds that account for the municipal liquor operations, garbage collections, and sewer, water and electric utilities. The City considers each of its enterprise funds to be a segment. Since the required segment information is already included in the City's proprietary funds' balance sheet and statement of revenues, expenses, and changes in net assets balance, this information has not been repeated in the notes to the basic financial statements. H. Conduit Debt Obligations From time to time, the City has issued revenue bonds to provide financial assistance to private- sector entities for the acquisition and construction of industrial and commercial, multi- family and educational facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payment received from the benefited entity. Neither the City, the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of December 31, 2011, there were seven series of revenue bonds outstanding, with an aggregate principal payable amount of $25,020,120. 63