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ELK RIVER MUNICIPAL UTILITIES <br />ELK RIVER, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />DECEMBER 31, 2008 AND 2007 <br />Note 5: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION -CONTINUED <br />Health insurance premiums - 2008 health insurance premiums for retirees were used as the basis for calculation of the <br />present value of total benefits to be paid. <br />Withdrawal -The probability that an employee will remain employed until the assumed retirement age was determined <br />using non-group specific age-based turnover data provided in Table 1 in Paragraph 35b of GASB 45. <br />Disability -None <br />Actuarial Method -Projected Unit Credit with 30-year amortization of the unfunded liability. <br />Valuation date -January 1, 2008 <br />Based on the historical and expected returns of the Utilities' short-term investment portfolio, a discount rate of 4.0 <br />percent was used. In addition, a simplified version of the entry age actuarial cost method was used. The unfunded <br />actuarial accrued liability is being amortized as a level dollar amount. The remaining amortization period at <br />December 31, 2008, was thirty years. <br />Required Supplementary Information <br />Schedule of Funding Progress for the Retiree Health Plan <br /> Actuarial <br /> Accrued <br /> Liability <br /> Actuarial (AAL) -- <br />Actuarial Value of Simplified <br />Valuation Assets Entry Age <br />Date (a) (b) <br />1/1/2008 $ - $ 56,892 <br />Unfunded AAL <br />(UAAL) <br />(b-a) <br />56,892 <br />Funded Covered <br />Ratio Payroll <br />(~) (c) <br />- % $ 2,300,000 <br />UAAL as a <br />Percentage <br />of Covered <br />Payroll <br />((b-a) / c) <br />0.02 <br />-30- <br />