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CITY OF ELK RIVER, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />DECEMBER 31, 2017 <br />67 <br />NOTE 12: POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS <br />A.Plan Description <br />The City provides other postemployment health insurance benefits for retired employees through two defined benefit <br />plans: Municipal Retirees Health Plan (MRHP), a single-employer plan, and Utilities Retirees Health Plan (URHP), a <br />multi-employer plan. Each plan provides benefits for eligible retirees and their dependents through the City’s group <br />health insurance plans, which cover both active and retired members. Since the premium is a blended rate determined on <br />the active and retiree population, the retirees are receiving an implicit rate subsidy. The MRHP and URHP do not issue <br />publicly available financial reports. <br />B.Funding Policy <br />Contribution requirements are reviewed at the time changes are made to the plans. Benefit provisions for MRHP are <br />established and amended by the City. The Utilities has been delegated authority to establish and amend benefit <br />provisions for URHP. 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 <br />employer, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC <br />represents the level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize <br />any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The URHP has elected to <br />calculate the ARC and related information using the alternative measurement method permitted for employers in plans <br />with fewer than one hundred total plan members. <br />The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed <br />to the plan, and changes in the City’s net OPEB obligation: <br />Municipal Utility <br />Retiree Retiree <br />Health Plan Health Plan <br />Annual required contribution (ARC)107,970$ 10,411$ <br />Interest on net OPEB obligation 17,320 2,469 <br />Adjustment to ARC (26,447) (3,836) <br />Annual OPEB cost 98,843 9,044 <br />Contributions made (47,958) (1,052) <br />Increase in net OPEB obligation 50,885 7,992 <br />Net OPEB obligation - beginning of year 494,858 70,545 <br />Net OPEB obligation - end of year 545,743$ 78,537$