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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2016 <br />D. FUNDING POLICY <br />The additional cost of using a blended rate for actives and retirees is currently funded on a pay-as-you- <br />go basis. The City Council may change the funding policy at any time. <br />E. ANNUAL OPEB COSTS AND NET OPEB OBLIGATION <br />The City's annual OPEB cost is calculated based on the annual required contribution (ARC) of the <br />employer, an amount actuarially determined in accordance with the parameters of GASB Statement No. <br />45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover <br />normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period <br />not to exceed 30 years. The net OPEB obligation as of December 31, 2016, was calculated as follows: <br />Annual required contribution (ARC) <br />$31,590 <br />Interest on net OPEB obligation <br />974 <br />Adjustment to Annual Required Contribution <br />(3,756) <br />Annual OPEB cost (expense) <br />28,808 <br />Contributions made <br />22,513 <br />Increase in net OPEB obligation <br />6,295 <br />Net OPEB obligation - beginning of year <br />90,852 <br />Net OPEB obligation - end of year <br />$97,147 <br />The net OPEB obligation is generally liquidated by the General Fund. <br />The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net <br />OPEB obligation for the previous three years was as follows: <br />F. FUNDED STATUS AND FUNDING PROGRESS <br />As of January 1, 2014, the most recent actuarial valuation date, the City's unfunded actuarial accrued liability <br />(URAL) was $547,626. The annual payroll for active employees covered by the plan in the actuarial valuation <br />was $5,265,020 for a ratio of UAAL to covered payroll ratio of 10.4%. <br />76 <br />Percentage of <br />Fiscal Year <br />Annual OPEB <br />Employer <br />Annual OPEB Cost <br />Net OPEB <br />Ended <br />Cost <br />Contributions <br />Contributed <br />Obligation <br />December 31, 2014 <br />$26,468 <br />$36,109 <br />136.4% <br />$91,023 <br />December 31, 2015 <br />28,814 <br />28,984 <br />100.6% <br />90,852 <br />December 31, 2016 <br />28,808 <br />22,513 <br />78.1% <br />97,147 <br />F. FUNDED STATUS AND FUNDING PROGRESS <br />As of January 1, 2014, the most recent actuarial valuation date, the City's unfunded actuarial accrued liability <br />(URAL) was $547,626. The annual payroll for active employees covered by the plan in the actuarial valuation <br />was $5,265,020 for a ratio of UAAL to covered payroll ratio of 10.4%. <br />76 <br />