4.1 ERMUSR 04-10-2018 - Laserfiche WebLink

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Elk River Municipal Utilities Elk River, Minnesota Notes to the Financial Statements December 31, 2017 Note 5: Postemployment Benefits Other Than Pensions (Continued) Annual OPEB Cost and Net OPEB Obligation. The Utilities' annual other postemployment benefit(OPEB) cost(expense) is calculated based on the annual required contribution of the employer(ARC). The Utility has elected to calculate the ARC and related information using the alternative measurement method permitted by GASB Statement 45 for employers in plans with fewer than one hundred total plan members. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the Utilities annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the Utilities' net OPEB obligation to the Retiree Health Plan. Annual Required Contribution $ 10,411 Interest on Net OPEB Obligation 2,469 Adjustment to Annual Required Contribution (3,836) Annual OPEB Cost (Expense) 9,044 Contributions Made Implicit subsidy 1,052 Increase in Net OPEB Obligation 7,992 Net OPEB Obligation - Beginning of Year 70,545 Net OPEB Obligation - End of Year $ 78,537 The Utilities' annual OPEB cost, the amount and percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for December 31, 2017 and the preceding two fiscal years was as follows: Three Year Trend Information Percentage Year Annual Employer Annual OPEB Net OPEB Ending OPEB Cost Contribution Contributed Obligation 12/31/2017 $ 9,044 $ 1,052 12 % 78,537 12/31/2016 10,559 3,055 29 70,545 12/31/2015 10,260 2,151 21 63,041 Funded Status and Funding Progress. As of January 1, 2017, the actuarial accrued liability for benefits was $48,766, all of which was unfunded. The covered payroll (annual payroll of active employees covered by the plan) was$3,362,758 and the ratio of the unfunded actuarial accrued liability to the covered payroll was 1.50 percent. The projection of future benefit payments for an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. 46 111)