06-02-25 - Council Work Session Agenda

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CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2024 D. TOTAL OPEB LIABILITY AND CHANGES IN TOTAL OPEB LIABILITY The City's total OPEB liability of $841,031 was measured as of December 31, 2024 and was determined by an actuarial valuation as of January 1, 2023. Changes in the total OPEB liability during 2024 were: Balance -beginning of year $802,063 Changes for the year: Service cost 63,419 Interest 33,911 Changes of benefit terms Differences between expected and actual experience Changes in assumptions (22,573) Benefit payments (35,789) Net changes 38,968 Balance - end of year $841,031 The OPEB liability will be liquidated by the general, rookery activity center, water, sewer, and storm water funds. The current portion of the OPEB liability is not material to the financial statements and therefore, is not presented separately from the amount due in more than one year on the statement of net position. E. ACTUARIAL ASSUMPTIONS AND OTHER INPUTS The total OPEB liability in the January 1, 2023 actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: Inflation 3.00% Salary increases 3.00% Discount rate 4.28% Investment rate of return N/A Healthcare cost trend rates 6.00% for 2024, decreasing 0.25% per year to an ultimate rate of 5.00% for 2028 and beyond Retirees' share of benefit -related costs 100% Since the plan is funded on a pay-as-you-go basis, both the discount rate and the investment rate of return were based on the 20-year AA rated municipal bond rate as of December 31, 2024, obtained from https://www. spglobal.com/spdji/en/indices/fixed-income/sp-municipal-bond-20-year-high-grade-rate- index/#overview. Pre -retirement mortality rates were based on the RP-2014 Total Dataset Mortality with Improvement Scale MP-2021. Post -retirement, disability retirement, and survivor retirement mortality rates were based on the RP-2014 White Collar Mortality with Improvement Scale MP-2021. Based on past experience of the plan, 50% of future retirees are assumed to continue medical coverage until age 65. 15% of future pre -Medicare retirees are assumed to select spousal coverage. No spousal coverage is assumed for other future retirees. 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 City employees are assumed to retire before the age of 60, 8% at age 60, and the balance at age 65. 78