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CITY OF ELK RIVER, MINNESOTA <br />NOTES TO THE FINANCIAL STATEMENTS <br />DECEMBER 31, 2018 <br />NOTE 12: POST EMPLOYMENT BENEFITS OTHER THAN PENSIONS <br />At December 31, 2018, the City adopted Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting <br />and Financial Reporting for Postemployment 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 />At December 31, 2018, the following employees were covered by the benefit terms: <br />Active plan members <br />Inactive members receiving benefits <br />Inactive members waiving benefits <br />Total plan members <br />B. Funding Policy <br />Municipal <br />Retiree <br />Health Plan <br />123 <br />Utility <br />Retiree <br />Health Plan <br />38 <br />132 43 <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. Total OPEB Liability <br />The City's (MRHP) total OPEB liability was measured as of January 1, 2018. <br />The total OPEB liability in the January 1, 2017 actuarial valuation was determined using the following actuarial <br />assumptions, applied to all periods included in the measurement, unless otherwise specified: <br />Actuarial cost method <br />Entry age <br />Amortization method <br />Level percentage of pay <br />Amortization period <br />Investment gains/losses are amortized over 5 years and liability <br />gains/losses are amortized over Average Working Lifetime <br />Inflation <br />2.50% <br />Healthcare cost trend rate <br />6.25% in 2018 grading to 5.00% over 5 years <br />Salary increases <br />3.00% <br />Discount rate <br />3.30% <br />Retirement age <br />Age 55 for Police and Fire, Age 63 for all others (based on PERA <br />average rates) <br />Mortality <br />RP -2014 with MP -2016 generational improvements <br />68 <br />