5.1. ERMUSR 04-13-2010 - Laserfiche WebLink

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ELK RIVER MUNICIPAL UTILITIES ELK RIVER, MINNESOTA NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2009 AND 2008 Nate 5~ P~STlEl1~PL~YI~ENT BENEFITS OTHER THAN PENSI®N - ~~NTINUED The Utilities' annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for December 31, 2009 and the preceding fiscal year was as follows; Three Year Trend Information Year Eliding Annual OPEB Cost Percentage Annual OPEB Contributed Net OPEB Obligation- _-_ 72/31/2009 ~ 10,030 w % $ 20,243 121311200$ 10,213 - 10,213 Funded Status and Funding Progress. As of December 31, 2009, the actuarial accrued liability for benefits was $56,892, all of which was unfunded. The covered payroll annual payroll of active employees covered by the plan} was $2,271,716 and the ratio of the unfunded actuarial accrued liability to the covered payroll was 2,50 percent, The pro j ection of future benefit payments far an ongoing plan involves esthates of the value of reported amounts and assumptions about tl~e probability of occurrence of events far into the future, Examples include assumptions about future employment, mortality, and the healthcare cost tl•end. Amounts determined regarding the funded status of the plan and the al~nual required contributions of the employer are subject to continual revision as actual results al•e compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over tune relative to the actuarial accrued liabilities for benefits, Nfet~ads and .~ssumptians. Projections of benefits far financial reporting purposes are based on the substantive plan ~th~ 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 shortMtel•m volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations, The following simplifying assumptions were made; Retu~ement age for active en~pZoyees - Based an the historical average retirement age for the covered group, active plan members were assumed to retire at age 62, or at the first subsequent year i11 which the member would qualify for benefits. Participation date - It is assumed that l0 percent of active participants continue coverage until age 65. Participants are assumed to continue in their current coverage type single ar family}. It is assumed that 100 percent of retirees will continue their current coverage until age 65. ~rfe .Expectancy -Life expectancies were based on mortality tables from the National Center far Health Statistics, The 2000 United States Life Tables for Males and for Females were used. Turnover -Non-group-specific age-based tur~lover data fi•om GASB Statement 45 were used as the basis for assigning active members a probability of rernallahag 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. ~ea~thcare cost trend rate -The expected rate of increase in healthcare insurance premiums was based on projections of the Office of the Actuary at the Centers for Medicare & Medicaid Services. A rate of 10.0 percent hritially, reduced to an ultimate rate of 5.0 percent after ten years, was used., _46_