6.1. SR 06-03-2013 - Laserfiche WebLink

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CITY OF ELK RIVER,MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31,2012 Note 4: OTHER INFORMATION-CONTINUED E. Other Postemployment Benefits(OPEB) 1. City of Elk River a. Plan Description The City provides other postemployment health insurance benefits for retired employees through two defined benefit plans: Municipal Retirees Health Plan(MRHP),a single-employer plan,and Utilities Retirees Health Plan(URHP),a multi-employer plan. Each plan provides benefits for eligible retirees and their dependents through the City's group health insurance plans,which cover both active and retired members. Since the premium is a blended rate determined on the active and retiree population,the retirees are receiving an implicit rate subsidy. The MRHP and URHP do not issue publicly available financial reports. b. Funding Policy Contribution requirements are reviewed at the time changes are made to the plans. Benefit provisions for MRHP are established and amended by the City. The Utilities has been delegated authority to establish and amend benefit provisions for URHP. Eligible retirees receiving benefits are required to pay 100%of the total premium. c. Annual OPEB Cost and Net OPEB Obligation The City's annual OPEB cost for each plan is calculated based on the annual required contribution(ARC) of the employer,an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents the level of funding that,if paid on an ongoing basis,is projected to cover normal cost each year and amortize any unfunded actuarial liabilities(or funding excess)over a period not to exceed thirty years. The URHP has elected to calculate the ARC and related information using the alternative measurement method permitted for employers in plans with fewer than one hundred total plan members. The following table shows the components of the City's annual OPEB cost for the year,the amount actually contributed to the plan,and changes in the City's net OPEB obligation: Municipal Utility Retiree Retiree Health Plan Health Plan Annual required contribution(ARC) $ 100,739 $ 6,527 Interest on net OPEB obligation 6,985 1,430 Adjustment to ARC (10,005) (3,356) Annual OPEB cost 97,719 4,601 Contributions made (36,810) - Increase in net OPEB obligation 60,909 4,601 Net OPEB obligation-beginning of year 174,636 35,759 Net OPEB obligation-end of year $ 235,545 $ 40,360 59