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CITY OF ELK RIVER, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />DECEMBER 31, 2015 <br />Note 7: POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS - CONTINUED <br />B. Funding Policy <br />Contribution requirements are reviewed at the time changes are made to the plans. Benefit provisions for MRHP are established <br />and amended by the City. The Utilities has been delegated authority to establish and amend benefit provisions for URHP. <br />Eligible retirees receiving benefits are required to pay 100% of the total premium. <br />C. Annual OPEB Cost and Net OPEB Obligation <br />The City's annual OPEB cost for each plan is calculated based on the annual required contribution (ARC) of the employer, an <br />amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents the level of <br />funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial <br />liabilities (or funding excess) over a period not to exceed thirty years. The URHP has elected to calculate the ARC and related <br />information using the alternative measurement method permitted for employers in plans with fewer than one hundred total plan <br />members. <br />The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the <br />plan, and changes in the City's net OPEB obligation: <br />Annual required contribution (ARC) <br />Interest on net OPEB obligation <br />Adjustment to ARC <br />Annual OPEB cost <br />Contributions made <br />Increase in net OPEB obligation <br />Net OPEB obligation - beginning of year <br />Net OPEB obligation - end of year <br />Municipal <br />Retiree <br />Health Plan <br />$ 125,720 <br />14,564 <br />(21,504) <br />118,780 <br />(48,640) <br />70,140 <br />364,110 <br />$ 434,250 <br />Utility <br />Retiree <br />Health Plan <br />$ 11,240 <br />2,197 <br />(3,177) <br />10,260 <br />(2,151) <br />8,109 <br />54,932 <br />$ 63,041 <br />The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for the <br />last three years are as follows: <br />Percentage of <br />Fiscal Year Annual Employer Annual OPEB Net Pension <br />Ended OPEB Cost Contribution Cost Contributed Obligation <br />MRHP <br />12/31/2013 $ 96,519 $ 48,803 51 % $ 283,261 <br />12/31/2014 120,448 39,599 33 364,110 <br />12/31/2015 118,780 48,640 41 434,250 <br />URHP <br />12/31/2013 $ 6,073 $ 1,391 23 % $ 45,042 <br />12/31/2014 9,890 - - 54,932 <br />12/31/2015 10,260 2,151 21 63,041 <br />-82- <br />