6.2. SR 06-17-2019 - Laserfiche WebLink

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CITY OF ELK RIVER, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31, 2018 C. Total OPEB Liability (Continued) The City's OPEB plan is not funded by a trust, and therefore, the City uses the 20 -year municipal bond index rate to develop its long-term rate of return and discount rate. This rate was 3.30% in the current actuarial valuation, which was updated from the 3.50% used in the prior actuarial valuation. The Utilities (URHP) total OPEB liability was measured as of December 31, 2018. The total OPEB liability in the January 1, 2018 was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Discount rate 3.31% Inflation rate 2.75% Salary increases 3.25% Healthcare cost trend rate 6.9% in 2018 grading to 5.2% over 3 years until 2055 grading down to 4.4% ultimate rate in 2074 Mortality RP -2014 with MP -2016 generational improvements The discount rate used to measure the total OPEB liability of 3.31%. The actuarial assumption used in the December 31, 2018 valuation were based on input from a variety of published sources of historical and projected future financial data. Each assumption was reviewed for reasonableness with the source information as well as for consistency with the other economic assumptions. D. Changes in the Total OPEB Liability Balances at December 31, 2017 Changes for the Year: Service cost Interest Benefit payments Changes in assumptions or other inputs Net Changes Balances at December 31, 2018 MRHP URHP Total OPEB Total OPEB Liability (a) Liability (a) $ 875,478 $ 81,453 58,939 11,084 30,051 3,526 (47,958) - - 4,509 41,032 19,119 $ 916,510 $ 100,572 The following changes in assumptions occurred between the current and prior actuarial valuations: City - MRHP • The discount rate was changed from 3.50% to 3.30%. • The withdrawal and retirement tables for all employees were updated. • The health care trend rates were changed to better anticipate short term and long term medical increases. • The mortality table was updated from the projection of RP 2000 rates to 2014(with Blue collar adjustment for Police and Fire personnel) to the RP -2014 adjusted to 2006 White Collar Mortality Tables with MP -2016 Generational Improvement Scale (Blue Collar Tables for Police and Fire personnel). • The percentage of future retirees assumed to elect spouse medical coverage post -employment was increased from 15% to 25% to better reflect actual plan experience. 69