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CITY OF LAKE ELMO, MINNESOTA NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2023 69 NOTE 5 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (Continued) Net OPEB Liability Sensitivity The following presents the net OPEB liability, calculated using the discount rate disclosed in the preceding section, as well as what the City’s net OPEB liability would be if it were calculated using a discount rate one percentage point lower or one percentage point higher than the current discount rate: Sensitivity of Net OPEB Liability at Current Single Discount Rate Rates Amounts 1% Increase in Discount Rate 5.05% $85,450 Current Discount Rate 4.05% $89,125 1% Decrease in Discount Rate 3.05% $96,508 The following presents the net OPEB liability, calculated using the healthcare cost trend rates disclosed in the preceding section, as well as what the City’s net OPEB liability would be if it were calculated using healthcare cost trend rates that are one percentage point lower or one percentage point higher than the current healthcare cost trend rates: Sensitivity of Net OPEB Liability at Current Healthcare Cost Trend Rate Amounts 1% Increase in Healthcare Trend Rates $101,252 Current Healthcare Trend Rates $89,125 1% Decrease in Healthcare Trend Rates $79,153 NOTE 6 OTHER NOTES 6.A. RISK MANAGEMENT Claims and Judgements The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. To manage these risks, the City purchases commercial insurance. The City retains risk for the deductible portions of the insurance. The amounts of these deductibles are considered immaterial to the financial statements. There were no significant reductions in insurance from the previous year settlements in excess of insurance for any of the past two years. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities, if any, include an amount for claims that have been incurred but not reported. The City’s management is not aware of any incurred but not reported claims. 6.B. OTHER EMPLOYEE BENEFITS The City provides eligible employees future retirement benefits through participation in the Minnesota Deferred Compensation Plan (MNDCP), which is a Section 457 plan administered by the Minnesota State Retirement System. Eligible employees of the City may begin participating in the MNDCP commencing on the date of their employment by electing to have a portion of their pay contributed to the Plan. Certain employees are eligible to receive a City match of employee contributions up to the qualifying amounts set forth in their employment contracts, and there are no vesting requirements related to such contributions. The City’s contributions to the plan total $3,509 for the year ended December 31, 2023.