AgdaPkt 2017-12-18 Special Joint SA PFA

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City of Redwood City Notes to the Basic Financial Statements For the fiscal year ended June 30, 2017 NOTE 9 – EMPLOYEE BENEFITS (CONTINUED) The Port’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan for 2017 and the two preceding fiscal years were as follows: Year Ended Annual OPEB Cost Annual OPEB Cost Contributed OPEB Obligation (Asset) $%$ 6/30/2015 35,737 15.8 202,238 6/30/2016 37,624 24.2 230,756 6/30/2017 39,863 21.1 262,219 Actuarial valuations of an ongoing plan involve estimates of the value of expected benefit payments and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the new 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 about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan participants) 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 participants to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short‐term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long‐term perspective of the calculations. C. Cafeteria Benefit Plan The City has a cafeteria benefit plan established pursuant to section 125 of the IRS code. Under this plan eligible employees may direct a contribution, made by the City or elect to contribute pre‐tax dollars, into any combination of the following three benefit categories: 1. Medical Insurance Premium Account 2. Out of Pocket Medical Spending Account 3. Dependent Care Spending Account Under no circumstances may an employee direct more than $5,000 annually into the Dependent Care Spending Account and $2,550 annually into the Medical Spending Account. This cap applies to both City contributions and employee pre‐tax contributions. There are no legal limits on contributions to the Health Premium Account. 74 6.1.E. - Page 97