01-24-2022 Council Packet - Laserfiche WebLink

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City of Orono, Minnesota Notes to the Financial Statements December 31, 2020 Note 5: Postemployment Benefits Other Than Pensions (Continued) C. Actuarial Methods and Assumptions The City’s total OPEB liability of $904,145 was measured as of January 1, 2020, and the total OPEB liability used to calculate the total OPEB liability was determined by an actuarial valuation as of January 1, 2020. Roll forward procedures were used to roll forward the total OPEB liability to the measurement date. The total OPEB liability in the January 1, 2020 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless ot herwise specified: Discount Rate 2.74% Expected Long-Term Investment Return N/A 20-Year Municipal Bond Yield 3.30% Inflation Rate 2.50% Salary Increases 3.25% Medical Trend Rate 7.67% in 2020 grading to 5% over 10 years The discount rate used to measure the total OPEB liability was 2.74 percent as of January 1, 2020. Mortality rates were based on the RP-2014 White Collar Mortality Tables (de-trended to 2006) and then projected beyond the valuation date using scale MP-2017. The actuarial assumptions used in the January 1, 2020 valuation were based on input from a variety of published sources of historical and projected future financial data. Each assumption was reviewed for reasonableness with the source information as well as for consistency with the other economic assumptions. D. Changes in the Total OPEB Liability Total OPEB Liability (a) Balances at December 31, 2019 873,437$ Changes for the Year: Service cost 87,721 Interest 38,684 Differences between expected and actual experience (179,406) Changes in assumptions or other inputs 114,403 Benefit payments (30,694) Net Changes 30,708 Balances at December 31, 2020 904,145$ Since the prior measurement date, the following assumptions changed: • The discount rate was changed from 4.09% to 2.74%.