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) E. Sensitivity of the Total OPEB Liability The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it w ere calculated using a discount rate that is 1-percentage point lower (1.74 percent) or 1-percentage-point higher (3.74 percent) than the current discount rate: 1 Percent 1 Percent Decrease (1.74%)Current (2.74%)Increase (3.74%) 982,132$ 904,145$ 830,597$ The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a Healthcare Cost Trent Rate that is 1 -percentage point lower (6.67 percent decreasing to 5.67 percent) or 1-percentage-point higher (8.67 percent increasing to 7.67 percent) than the current cost trend rate: Healthcare Cost 1 Percent Decrease Trend Rates 1 Percent Increase (6.67% Decreasing (7.67% Decreasing (8.67% Decreasing to 5.67%)to 6.67%)to 7.67%) 786,208$ 904,145$ 1,044,862$ Note 6: Other Information A. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. Workers compensation coverage is provided through a pooled self -insurance program through the League of Minnesota Cities Insurance Trust (LMCIT). The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through Workers Compensation Reinsurance Association (WCRA) as required by law. For workers compensation, the City is not subject to a deductible. Property and casualty insurance is provided through a pooled self -insurance program through the LMCIT. The City pays an annual premium to the LMCIT. The City is subject to supplemental assessments if deemed necessary by the LMCIT. The LMCIT reinsures through commercial companies for claim s in excess of various amounts. The City retains risk for the deductible portion of the insurance policies and for any exclusion s from the insurance policies. These amounts are considered immaterial to the financial statements. The City continues to carry commercial insurance for all other risks of loss, including disability and employee health insurance. There were no significant reductions in insurance from the previous year or settlements in excess of insurance coverage for any of the past three fiscal years. The risk management activities of the City are accounted for by the Risk Management fund, an internal service fund, which charges its costs to user departments. The fund is designed to build up a reserve which will provide the City the opportunity to assume a greater share of its insurance risks and thereby reducing the cost to purchase insurance.