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IV-36CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 organizations. The asset class estimates and the target allocations were then combined to produce a geometric, long-term expected real rate of return for the portfolio. Inflation expectations were applied to derive the nominal rate of return for the portfolio. 3. Description of Significant Investment Policy Changes During the Year The SBI made no significant changes to their investment policy during fiscal year 2018 for the Statewide Volunteer Firefighter Retiremoot Plan. L PENSION PLAN FIDUCIARY NET POSITION Detailed information about the SVF plan's fiduciary net position at June 30, 2018 is available in a separately-issued PERA financial report that includes financial statements and required supplementary information. That report may be obtained at www.mnpera.org. Note 9 POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS {OPEBl A. PLAN DESCRIPTION In addition to providing the pension benefits described in Notes 7 and 8, the City provides post-employment health care benefits, as defined in paragraph B, through its group health insurance plan {the plan). The plan is a single-employer defined benefit OPEB plan administered by the City. The authority to provide these benefits is established in Minnesota Statutes Sections 471.61 Subd. 2a and 299A.465. The benefits, benefit levels, employee contributions and employer contributions are governed by the City and can be amended by the City through its personnel manual and collective bargaining agreements with employee groups. No assets are accumulated in a trust that meets the criteria in paragraph 4 ofGASB Statement No. 75. B. BENEFITS PROVIDED The City is required by State Statute to allow retirees to continue participation in the City's group health insurance plan if the individual terminates service with the City through service retirement or disability retirement. Active employees, who retire from the City when over age 50 and with 20 years of service, may continue coverage with respect to both themselves and their eligible dependent{s) under the City's health benefits program until age 65. The City provides health coverage for peace officers or firefighters disabled or killed in the line of duty in accordance with Minnesota Statute 299A.465. The amount of coverage provided is equal to the employer portion of health insurance premiums that would have otherwise been paid if the officer or firefighter was an active employee. During 2018, benefits were provided to one officer killed in the line of duty. All health care coverage is provided through the City's group health insurance plans. The retiree is required to pay I 00% of their premium cost for the City-sponsored group health insurance plan in which they participate. The premium is a blended rate determined on the entire active and retiree population. Since the projected claims costs for retirees exceed the blended premium paid by retirees, the retirees are receiving an implicit rate subsidy {benefit). The coverage levels are the same as those CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2018 afforded to active employees. Upon a retiree reaching age 65, Medicare becomes the primary insurer and the City's plan becomes secondary. C. PARTICIPANTS As of the January I, 2017 actuarial valuation, participants of the plan consisted of: Active employees Inactive employees or beneficiaries currently receiving benefits Total 46 6 52 D. TOTAL OPED LIABILITY AND CHANGES IN TOTAL OPED LIABILITY The City's total OPEB liability of$756,644 was measured as of December 31, 2018, and was determined by an actuarial valuation as ofJanuary I, 2017. Changes in the total OPEB liability during 2018 were: Balance -beginning of year Changes for the year: Service cost Interest Changes of benefit terms Differences between expected and actual experience Changes in assumptions Benefit payments Net changes Balance -end of year The OPEB liability will be liquidated by the general, water and sewer funds. E. ACTUARIAL ASSUMPTIONS AND OTHER INPUTS $746,540 16,547 21,355 (27,798) 10,104 $7~644 The total OPEB liability in the January I, 2017 actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: Inflation Salary increases Discount rate Investment rate of return Healthcare cost trend rates Retirees' share of benefit-related costs 3.50% 3.50%, 2.85% 2.85% 8.00% for 2017, decreasing 1.00"/o per year to an ultimate rate of3.00o/o for 2022 and beyond 100%