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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2012 <br /> <br />58 <br /> <br />Note 19 OTHER POSTEMPLOYME NT BENEFIT PLAN (CONTINUED) <br />C. Annual OPEB Cost and Net OPEB Obligation <br />The City’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual <br />required contribution (ARC), an amount actuarially determined in accordance with the parameters of <br />GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected <br />to cover normal cost each year and amortize any un -funded actuarial liabilities ove r a period not to exceed <br />thirty years. The following table shows the components of the City’s annual OPEB cost for the year, the <br />amount actually paid from the plan, and changes in the City’s net OPEB obligation. <br /> <br />Annual Required Contribution29,449 $ <br />Interest on Net OPEB Obligation1,456 <br />Adjustment to Annual Required Contribution(1,295) <br />Annual OPEB Cost (Expense)29,610 <br />Contributions Made(24,597) <br />Increase in Net OPEB Obligation5,013 <br />N et OPEB Obligation- Beginning of Year72,808 <br />N et OPEB Obligation- End of Yea r 77,821 $ <br />The City’s annual OPEB cost, the percentage of the annual OPEB cost contributed to the plan, and the net <br />OPEB obligation for 2012: <br /> <br />Percentage <br />FiscalAnnualof Annual N et <br />YearOPEBOPEB CostOPEB <br />EndedCostContributedObligation <br />12/31/201040,404 $ 51.1%63,287 $ <br />12/31/201127,917 65.9%72,808 <br />12/31/201229,610 65.2%77,821 <br />D. Funded Status and Funding Progress <br />As of January 1, 2011, the most recent actuarial valuation date, the City’s unfunded actuarial accrued <br />liability (UAAL) was $474,770. The annual payroll for active employees covered by the plan in the <br />actuarial valuation was $4,953,560 for a ratio of UAAL to covered payroll of 9.6%. <br /> <br />Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and <br />assumptions about the probability of occurrence of events far into the fu ture. Examples include <br />assumptions about future employ ment, mortality, and healthcare co st trends. Amounts determined <br />regarding the funded status of the plan and the annual required contributions of the employer are subject to <br />continual revision as actual results are compared with past expectations and new estimates are made about <br />the future. The schedule of funding progress, presen ted as required supplementary information following <br />the notes to the financial statements, presents multiyear trend information about wh ether the actuarial value <br />of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.