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CITY OF LAKE ELMO, MINNESOTA NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2024 70 NOTE 5 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS (Continued) Changes in Plan Provisions: • There were no changes in plan provisions since the prior valuation. Changes in Actuarial Assumptions: • The discount rate was changed from 4.05 percent to 3.77 percent based on updated 20-year municipal bonds rates. • Healthcare trend rates were reset to reflect updated cost increase expectations. • Medical per capita claims costs were updated to reflect recent experience. • Withdrawal, mortality, and salary increase rates were added from the 7/1/2023 PERA Police & Fire Plan valuation for new Police & Fire employees. • The percent of future retirees assumed to elect coverage at retirement changed from 40% to 20% to reflect recent plan experience. 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 4.77% $57,130 Current Discount Rate 3.77% $61,992 1% Decrease in Discount Rate 2.77% $67,360 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 $70,342 Current Healthcare Trend Rates $61,992 1% Decrease in Healthcare Trend Rates $55,122 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 omi ssions; 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 financi al 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.