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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2024 <br /> <br /> <br /> <br /> <br />D. TOTAL OPEB LIABILITY AND CHANGES IN TOTAL OPEB LIABILITY <br /> <br />The City’s total OPEB liability of $841,031 was measured as of December 31, 2024 and was determined by <br />an actuarial valuation as of January 1, 2023. Changes in the total OPEB liability during 2024 were: <br /> <br />Balance - beginning of year $802,063 <br />Changes for the year: <br />Service cost 63,419 <br />Interest 33,911 <br />Changes of benefit terms - <br />Differences between expected and actual experience - <br />Changes in assumptions (22,573) <br />Benefit payments (35,789) <br />Net changes 38,968 <br />Balance - end of year $841,031 <br /> <br />The OPEB liability will be liquidated by the general, rookery activity center, water, sewer, and storm water <br />funds. The current portion of the OPEB liability is not material to the financial statements and therefore, is <br />not presented separately from the amount due in more than one year on the statement of net position. <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 <br />actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise <br />specified: <br /> <br />Inflation 3.00% <br />Salary increases 3.00% <br />Discount rate 4.28% <br />Investment rate of return N/A <br />Healthcare cost trend rates 6.00% for 2024, decreasing 0.25% per year to <br /> an ultimate rate of 5.00% 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 <br />were based on the 20-year AA rated municipal bond rate as of December 31, 2024, 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 Scale <br />MP-2021. Post-retirement, disability retirement, and survivor retirement mortality rates were based on the <br />RP-2014 White Collar Mortality 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 <br />age 65. 15% of future pre-Medicare retirees are assumed to select spousal coverage. No spousal coverage is <br />assumed for other future retirees. 43% of police/fire employees are assumed to retire before the age of 60, <br />25% at age 60, and the balance at age 65. 5% of other City employees are assumed to retire before the age <br />of 60, 8% at age 60, and the balance at age 65. <br /> <br /> <br />78 <br />Page 114 of 353