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CITY OF ELK RIVER <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />YEAR ENDING DECEMBER 31, 2016 <br />NOTE 12 POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS (CONTINUED) <br />C. Annual OPEB Cost and Net OPEB Obligation (Continued) <br />The following table shows the components of the City's annual OPEB cost for the year, <br />the amount actually contributed to the plan, and changes in the City's net OPEB <br />obligation: <br />Municipal Utility <br />Retiree Retiree <br />Health Plan Health Plan <br />Annual Required Contribution $ <br />125,720 $ <br />11,682 <br />Interest on Net OPEB Obligation <br />17,370 <br />2,522 <br />Adjustment to Annual Required Contribution <br />(25,899) <br />(3,645) <br />Annual OPEB Cost (Expense) <br />117,191 <br />10,559 <br />Contributions Made (56,583) (3,055) <br />Increase in Net OPEB Obligation <br />60,608 <br />7,504 <br />Net OPEB Obligation - Beginning of Year <br />434,250 <br />63,041 <br />Net OPEB Obligation - End of Year $ <br />494,858 $ <br />70,545 <br />The City's annual OPEB cost, the percentage of annual <br />OPEB cost contributed to the <br />plan and the net OPEB obligation for the last three years are as follows: <br />Percentage <br />Annual <br />of Annual <br />Net <br />OPEB <br />OPEB Cost <br />OPEB <br />Fiscal Year Ended Cost <br />Contributed <br />Obligation <br />MRHP <br />December 31, 2016 <br />December 31, 2015 <br />December 31, 2014 <br />URHP <br />December 31, 2016 <br />December 31, 2015 <br />December 31, 2014 <br />117,191 48.3% <br />118,780 41.0% <br />120,448 33.0% <br />10,559 28.9% <br />10,260 21.0% <br />9,890 0.0% <br />494,858 <br />434,250 <br />364,110 <br />70,545 <br />63,041 <br />54,932 <br />D. Actuarial Methods and Assumptions <br />Projections of benefits for financial reporting purposes are based on the substantive plan <br />(the plan as understood by the employer and plan members) and include the types of <br />benefits provided at the time of each valuation and the historical pattern of sharing of <br />benefit costs between the employer and plan members to that point. The methods and <br />assumptions used include techniques that are designed to reduce the effects of short- <br />term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent <br />with the long-term perspective of the calculations. <br />For the MRHP, in the January 1, 2014 actuarial valuation, the projected unit credit <br />actuarial cost method was used. The actuarial assumptions included a 4% investment <br />rate of return and an annual healthcare cost trend rate of 7.5% initially, reduced <br />incrementally to an ultimate rate of 5% after ten years. The actuarial value of assets was <br />not determined as the City has not advance -funded its obligation. The plan's unfunded <br />actuarial accrued liability was amortized as a level dollar amount over a closed basis. <br />in <br />