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6.C. - Page 111 of 196 <br />CITY OF REDWOOD CITY <br />NOTES TO THE BASIC FINANCIAL STATEMENTS <br />For the Fiscal Year Ended June 30, 2020 <br />NOTE 9 — EMPLOYEE BENEFITS (CONTINUED) <br />B. Post Employment Benefits, Continued <br />Contributions <br />The OPEB Plan and its contribution requirements are established by Memoranda of Understanding with the <br />applicable employee bargaining units and may be amended by agreements between the Authority and the <br />bargaining units. The annual contribution is based on the actuarially determined contribution. For the fiscal <br />year ended June 30, 2020, the Port did not make any cash contributions to the trust. <br />Net OPEB Liability <br />The Port's net OPEB liability was measured as of June 30, 2019 and the total OPEB liability used to calculate <br />the net OPEB liability was determined by an actuarial valuation dated June 30, 2019, based on the following <br />actuarial methods and assumptions: <br />Actuarial Assumption <br />Discount Rate Based on the Fidelity General Obligation AA Index <br />Inflation 2.75% as of June 30, 2019 <br />Salary Increases 3.0% including inflation <br />Investment Rate of Return 3.56% <br />Healthcare Trend Rate Medical premiums assumed to increase 8.0% in 2019 and 2020, <br />7.0% in 2021 through 2030, and 6.0% each year thereafter. <br />Mortality Rate Based on the 2014 Ca1PERS OPEB Assumptions Model <br />Since the benefits are not funded, the discount rate is equal to the 20 -Year Bond Rate. The Port has chosen to <br />use the "Fidelity General Obligation AA Index" as its 20 -year bond rate. That Index was 3.62% at June 30, <br />2018, and 2.75% at June 30, 2019. <br />Discount Rate <br />The discount rate used to measure the total OPEB liability was 2.75 percent. The projection of cash flows <br />used to determine the discount rate assumed that District contributions will be made at rates equal to the <br />actuarially determined contribution rates. Based on those assumptions, the OPEB plan's fiduciary net position <br />was projected to be available to make all projected OPEB payments for current active and inactive employees <br />and beneficiaries. Therefore, the long-term expected rate of return on OPEB plan investments was applied to <br />all periods of projected benefit payments to determine the total OPEB liability. <br />79 198 <br />