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6.1.E. - Page 97 , <br /> Notes to the Basic Financial Statements <br /> For the year ended June 30, 2015 <br /> NOTE 9—EMPLOYEE BENEFITS(CONTINUED) <br /> Actuarial valuations of an ongoing plan involve estimates of the value of expected benefit payments 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 new employer are <br /> subject to continual revision as actual results are compared with past expectations and new estimates <br /> are made about the future. The schedule of funding progress, presented as required supplementary <br /> information following the notes to the financial statements, presents multi-year trend information <br /> about whether the actuarial value of plan assets is increasing or decreasing over time relative to the <br /> actuarial accrued liabilities. <br /> Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as <br /> understood by the employer and the plan participants) and include the types of benefits provided at the <br /> time of each valuation and the historical pattern of sharing of benefit costs between the employer and <br /> plan participants to that point. The actuarial methods and assumptions used include techniques that <br /> are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the <br /> actuarial value of assets, consistent with the long-term perspective of the calculations. <br /> C. Cafeteria Benefit Plan <br /> The City has a cafeteria benefit plan established pursuant to section 125 of the IRS code. Under this <br /> plan eligible employees may direct a contribution, made by the City or elect to contribute pre-tax <br /> dollars, into any combination of the following three benefit categories: <br /> 1. Medical Insurance Premium Account <br /> 2. Out of Pocket Medical Spending Account <br /> 3. Dependent Care Spending Account <br /> Under no circumstances may an employee direct more than $5,000 annually into the Dependent Care <br /> Spending Account and $2,550 annually into the Medical Spending Account. This cap applies to both City <br /> contributions and employee pre-tax contributions. There are no legal limits on contributions to the <br /> Health Premium Account. <br /> All regular full-time and part-time employees employed on a regular and continuous basis, including <br /> certain contractual employees, are eligible to participate in this plan. Temporary and casual employees <br /> are not eligible. The plan year adopted by the City begins on January 1 and ends December 31. <br /> To obtain reimbursement of expenses incurred within a plan year within the spending accounts (items 2 <br /> or 3), employees must submit claims within 90 days of the end of the plan year or separation of service <br /> from the City, whichever occurs first. Funds unclaimed after 90 days of the close of the plan year are <br /> then remitted to the City. <br /> D. Deferred Compensation Plans <br /> City employees may defer a portion of their compensation under four separate, optional City-sponsored <br /> deferred compensation plans created in accordance with Internal Revenue Code Section 457. Under <br /> these plans, participants are not taxed on the deferred portion of their compensation until distributed <br /> 68 <br />