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 For the MRHP,in the January 1,2011 actuarial valuation,the projected unit credit actuarial cost method was used. The actuarial assumptions included a 4%investment rate of return and an annual healthcare cost trend rate of 8%initially,reduced incrementally to an ultimate rate of 5%after six years. The actuarial value of assets was not determined as the City has not advance-funded its obligation. The plan's unfunded actuarial accrued liability was amortized as a level dollar amount over a closed basis. The remaining amortization period at December 31,2012 was thirty years. For the URHP,the following simplifying assumptions were made: Retirement age for active employees—Based on the historical average retirement age for the covered group, active plan members were assumed to retire at age 62,or at the first subsequent year in which the member would qualify for benefits. Participation Rate—It is assumed that 10%of active participants continue coverage until age 65. Participants are assumed to continue in their current coverage type(single or family). It is assumed that 100%of retirees will continue their current coverage until age 65. Life Expectancy—Life expectancies were based on mortatity tables from the National Center for Health Statistics. The 2000 United States Life Tables for Males and for Females were used. I 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 put-poses 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. j 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. I 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,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 31,2012 was thirty years. F. 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 fiends'balance sheet and statement of revenues,expenses,and changes in net position balance,this information has not been repeated in the notes to the basic financial statements. I 61