Comprehensive Annual Financial Report 12/31/2009

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VOW CITY OF LINO LAKES, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2009 Note 19 OTHER POSTEMPLOYMENT BENEFIT PLAN At December 31, 2008, the City adopted Governmental Accounting Standards Board (GASB) Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions. The City engaged an actuary to determine the City's liability for postemployment healthcare benefits other than pensions as of January 1, 2008. OWN Nliow A. Plan Description The City provides benefits for retirees as required by Minnesota Statute §471.61 subdivision 2b. 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. Pursuant to the provisions of the plan, retirees are required to pay the total premium cost. As of December 31, 2009 there were approximately 63 active participants and 5 retired participants receiving benefits from the City's health plans. B. Funding Policy The City funds its OPEB obligation on a pay as you go basis. For fiscal year 2009, the City contributed $18,889 to the plan. C. Annual OPEB Cost and Net OPEB Obligation The City's annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any un- funded actuarial liabilities over a period not to exceed thirty years. The following table shows the components of the City's annual OPEB cost for the year, the amount actually paid from the plan, and changes in the City's net OPEB obligation. Annual Required Contribution $ 41,152 Annual OPEB Cost (Expense) 41,152 Contributions Made (18,899) Increase in Net OPEB Obligation 22,253 Net OPEB Obligation- Beginning of Year 22,481 Net OPEB Obligation- End of Year $ 44,734 The City's annual OPEB cost, the percentage of the annual OPEB cost contributed to the plan, and the net OPEB obligation for 2009: Percentage Fiscal Annual of Annual Net Year OPEB OPEB Cost OPEB Ended Cost Constributed Obligation 12/31/2008 $ 41,152 45.4% $ 22,481 12/31/2009 41,152 45.9% 44,734 D. Funded Status and Funding Progress As of January 1, 2008, the most recent actuarial valuation date, the City's unfunded actuarial accrued liability (UAAL) was $329,191. The annual payroll for active employees covered by the plan in the actuarial valuation was $4,859,980 for a ratio of UAAL to covered payroll of 6.8 %.