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CITY OF ST. ANTHONY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2016 The City had an actuarial valuation performed for the plan as of January 1, 2016 to determine the funded status of the plan as of that date as well as the employer’s annual required contribution (ARC) for the fiscal year ended December 31, 2016. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for 2014, 2015, and 2016 was as follows: Percentage of Fiscal Year Annual OPEB Employer Annual OPEB Cost Net OPEB Ended Cost Contributions Contributed Obligation December 31, 2014 106,523 13,386 13%509,707 December 31, 2015 110,886 19,485 18%601,108 December 31, 2016 72,361 8,879 12%664,590 F. FUNDED STATUS AND FUNDING PROGRESS The City currently has no assets that have been irrevocably deposited in a trust for future health benefits; therefore, the actuarial value of assets is zero. The funded status of the plan was as follows: Actuarial Unfunded Actuarial UAAL as a Actuarial Actuarial Accrued Accrued Funded Covered Percentage of Valuation Value of Assets Liability (AAL)*Liability (UAAL) Ratio Payroll Covered Payroll Date (a)(b)(b-a)(a/b)(c) ( (b-a) / c) January 1, 2016 $ - $644,198 $644,198 0.00% $4,162,000 15.48% *Using the Projected Unit Credit Actuarial cost method. G. ACTUARIAL METHODS AND ASSUMPTIONS Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality and the health care cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions (ARC) of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effect of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the January 1, 2016 actuarial valuation, the Projected Unit Credit Actuarial cost method was used. The actuarial assumptions included a 4.5% investment rate of return (net of administrative expenses), an initial annual health care cost trend rate of 9% reduced by .33% each year to arrive at an ultimate health care cost trend rate of 5.0% and an inflation rate of 3.5%. The actuarial value of assets was $0. The plan’s 78