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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2022 <br /> <br /> <br /> <br /> <br />D. TOTAL OPEB LIABILITY AND CHANGES IN TOTAL OPEB LIABILITY <br /> <br />The City’s total OPEB liability of $463,737 was measured as of December 31, 2022 and was <br />determined by an actuarial valuation as of January 1, 2021. Changes in the total OPEB liability during <br />2022 were: <br /> <br />Balance - beginning of year $502,243 <br />Changes for the year: <br />Service cost 59,608 <br />Interest 12,384 <br />Changes of benefit terms - <br />Differences between expected and actual experience - <br />Changes in assumptions (87,527) <br />Benefit payments (22,971) <br />Net changes (38,506) <br />Balance - end of year $463,737 <br /> <br />The OPEB liability will be liquidated by the general, rookery activity center, water, sewer, and storm <br />water funds. <br /> <br /> <br />E. ACTUARIAL ASSUMPTIONS AND OTHER INPUTS <br /> <br />The total OPEB liability in the January 1, 2021 actuarial valuation was determined using the following <br />actuarial assumptions and other inputs, applied to all periods included in the measurement, unless <br />otherwise specified: <br /> <br />Inflation 3.00% <br />Salary increases 3.00% <br />Discount rate 4.31% <br />Investment rate of return N/A <br />Healthcare cost trend rates 6.00% for 2022, decreasing 0.25% per year <br /> to an ultimate rate of 5% for 2026 and beyond <br />Retirees' share of benefit-related costs 100% <br /> <br />Since the plan is funded on a pay-as-you-go basis, both the discount rate and the investment rate of return <br />was based on the 20-year AA rated municipal bond rate as of December 31, 2022, obtained from <br />https://www.spglobal.com/spdji/en/indices/fixed-income/sp-municipal-bond-20-year-high-grade-rate- <br />index/#overview. <br /> <br />Pre-retirement mortality rates were based on the RP-2014 Total Dataset Mortality with Improvement <br />Scale MP-2020. Post-retirement, disability retirement, and survivor retirement mortality rates were <br />based on the RP-2014 White Collar Mortality with Improvement Scale MP-2020. <br /> <br />Based on past experience of the plan, 50% of future retirees are assumed to continue medical coverage <br />until age 65. 15% of future pre-Medicare retirees are assumed to select spousal coverage. No spousal <br />coverage is assumed for other future retirees. 25% of police/fire employees are assumed to retire at age <br />60, the balance at age 65. 8% of other City employees are assumed to retire at age 62, the balance at age <br />65. <br /> <br />77