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8.A. - Page 80
<br /> ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial
<br /> liabilities(or funding excess)over a period not to exceed thirty years.
<br /> The following table shows the components of the City's annual OPEB costs for the year, the
<br /> amount actually contributed to the plan, and changes in the City's net OPEB obligation.
<br /> Annual Required Contribution $4,802,000
<br /> Interest on net OPEB obligation 530,000
<br /> Adjustment to annual required contribution (442,000)
<br /> Annual OPEB Cost 4,890,000
<br /> Contributions made to irrevocable trust (2,419,901)
<br /> Benefit payments made outside of trust (2,470,099)
<br /> Increase in net OPEB obligation -
<br /> Net OPEB obligation - beginning of the year 6,962,477
<br /> Net OPEB obligation - end of the year 6,962,477
<br /> The General fund,the Capital Outlay fund, and other non-major funds have been used to finance
<br /> the net OPEB obligation.
<br /> The City annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the
<br /> net OPEB obligation for the fiscal year ended June 30,2014 and the two preceding years were as follows:
<br /> Annual OPEB
<br /> Annual OPEB Cost Obligation
<br /> Year Ended OPEB Cost Contributed (Asset)
<br /> 6/30/2012 $5,018,000 98% $6,868,477
<br /> 6/30/2013 5,172,000 98 6,962,477
<br /> 6/30/2014 4,890,000 100 6,962,477
<br /> As of June 30, 2013, the most recent actuarial valuation date, the plan was 19.6% funded. The
<br /> actuarial accrued liability (AAL) for benefits was $56,177,000, and the actuarial value of plan assets was
<br /> $11,001,000, resulting in an unfunded actuarial accrued liability (UAAL) of $45,176,000. The covered
<br /> payroll (annual payroll of active employees covered by the plan)was $48,399,901 and the ratio of UAAL
<br /> to the covered payroll was 93.3%.
<br /> Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
<br /> assumptions about the probability of occurrence of events far into the future. Examples include
<br /> assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined
<br /> regarding the funded status of the plan and the annual required contributions of the employer are subject
<br /> to continual revision as actual results are compared with past expectations and new estimates are made
<br /> about the future. The Schedule of Funding Progress, presented as Required Supplementary Information
<br /> following the notes to the financial statements, presents multiyear trend information about whether the
<br /> actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued
<br /> liabilities for benefits.
<br /> Projections of benefits for financial reporting purposes are based on the substantive plan (the
<br /> plan as understood by the employer and the plan members)and include the types of benefits provided at
<br /> the time of each valuation and the historical pattern of sharing of benefit costs between the employer and
<br /> plan members to that point. The actuarial methods and assumptions used include techniques that are
<br /> designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial
<br /> value of assets,consistent with the long-term perspective of the calculations.
<br /> In the June 30, 2013 actuarial valuation, the actuarial cost method used is Entry Age Normal
<br /> (EAN)cost method. Under the EAN cost method, the plan's Normal Cost is developed as a level percent
<br /> of payroll throughout the participants'working lifetime.Entry age is based on current age minus years of
<br /> service. The Actuarial Accrued Liability (AAL) is the cumulative value on the valuation date of prior
<br /> Normal Cost.
<br /> Appendix A
<br /> Page 6
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