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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2008 <br />Note 19 OTHER POST EMPLOYMENT BENEFIT PLAN (CONTINUED) <br />E. Actuarial Methods and Assumptions <br />Projections of benefits for fmancial reporting purposes are based on the substantive plan (the plan as <br />understood by the employer and plan members) and include the types of benefits provided at the time of <br />each valuation and the historical pattern of sharing of benefit costs between the employer and plan members <br />to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the <br />effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent <br />with the long -term perspective of the calculations. <br />In the January 1, 2008 actuarial valuation, the projected unit credit actuarial cost method was used. The <br />actuarial assumptions included a 4% investment rate of return (net of administrative expenses), which is a <br />blended rate of the expected long -term investment returns on plan assets and on the employer's own <br />investments calculated based on the funded level of the plan at the valuation date. The initial healthcare <br />trend rate was 9 %, reduced by decrements to an ultimate rate of 5% after nine years. The UAAL is being <br />amortized as a level percentage of projected payrolls on an open basis. The remaining amortization period <br />at December 31, 2008 was 29 years. <br />57 <br />