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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2023 <br /> <br /> <br /> <br /> <br />D. TOTAL OPEB LIABILITY AND CHANGES IN TOTAL OPEB LIABILITY <br /> <br />The City’s total OPEB liability of $802,063 was measured as of December 31, 2023 and was determined by an actuarial <br />valuation as of January 1, 2023. Changes in the total OPEB liability during 2023 were: <br /> <br />Balance - beginning of year $463,737 <br />Changes for the year: <br />Service cost 42,687 <br />Interest 21,236 <br />Changes of benefit terms - <br />Differences between expected and actual experience 263,454 <br />Changes in assumptions 38,665 <br />Benefit payments (27,716) <br />Net changes 338,326 <br />Balance - end of year $802,063 <br /> <br />The OPEB liability will be liquidated by the general, rookery activity center, water, sewer, and storm water funds. The <br />current portion of the OPEB liability is not material to the financial statements. <br /> <br /> <br />E. ACTUARIAL ASSUMPTIONS AND OTHER INPUTS <br /> <br />The total OPEB liability in the January 1, 2023 actuarial valuation was determined using the following actuarial assumptions <br />and other inputs, applied to all periods included in the measurement, unless otherwise specified: <br /> <br />Inflation 3.00% <br />Salary increases 3.00% <br />Discount rate 4.00% <br />Investment rate of return N/A <br />Healthcare cost trend rates 6.25% for 2023, decreasing 0.25% per year <br /> to an ultimate rate of 5% for 2028 and beyond <br />Retirees' share of benefit-related costs 100% <br />Since the plan is funded on a pay-as-you-go basis, both the discount rate and the investment rate of return was based on the <br />20-year AA rated municipal bond rate as of December 31, 2023, obtained from <br />https://www.spglobal.com/spdji/en/indices/fixed-income/sp-municipal-bond-20-year-high-grade-rate-index/#overview. <br /> <br />Pre-retirement mortality rates were based on the RP-2014 Total Dataset Mortality with Improvement Scale MP-2021. Post- <br />retirement, disability retirement, and survivor retirement mortality rates were based on the RP-2014 White Collar Mortality <br />with Improvement Scale MP-2021. <br /> <br />Based on past experience of the plan, 50% of future retirees are assumed to continue medical coverage until age 65. 15% of <br />future pre-Medicare retirees are assumed to select spousal coverage. No spousal coverage is assumed for other future retirees. <br />43% of police/fire employees are assumed to retire before the age of 60, 25% at age 60, and the balance at age 65. 5% of other <br />City employees are assumed to retire before the age of 60, 8% at age 60, and the balance at age 65. <br /> <br />74 <br />81