6.6. SR 06-04-2018 - Laserfiche WebLink

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CITY OF ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2017 68 NOTE 12: POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS – CONTINUED C.Annual OPEB Cost and Net OPEB Obligation (Continued) The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for the last three years are as follows: Percentage of Annual Employer Annual OPEB Net Pension Fiscal Year Ended OPEB Cost Contribution Cost Contributed Obligation MRHP: 12/31/2017 98,843$ 39,599$ 49%545,743$ 12/31/2016 117,191 48,803 48%494,858 12/31/2015 118,780 36,810 41%434,250 URHP: 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 D.Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. For the MRHP, in the January 1, 2017 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 3.5% investment rate of return and an annual healthcare cost trend rate of 6.5% 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, 2017 was over no more than 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 60, 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 mortality tables from the National Center for Health Statistics. The 2000 United States Life Tables for Males and for Females were used. 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 purposes of allocating to periods the present value of total benefits to be paid.