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City of Orono, Minnesota <br />Notes to the Financial Statements <br />December 31, 2023 <br />Note 5: Postemployment Benefits Other Than Pensions <br />A. Plan Description <br />The City provides a single-employer defined benefit health care plan to eligible retirees and their spouses. The plan offers <br />medical coverage and is administered by Health Partners, Inc. <br />medical coverage, and to obtain requests for proposals in order to provide the most favorable benefits and premiums for <br />City employees and retirees. The City does not issue a publicly available report. <br />Inactive Plan Members or Beneficiaries Currently Receiving Benefit Payments 3 <br />Active Plan Members 52 <br />Total Plan Members 55 <br />B. Funding Policy <br />Retirees receiving benefits contribute 100 percent of their premium costs. Retirees and their spouses contribute to the <br />health care plan at the same rate as City employees. This results in the retirees receiving an implicit rate subsidy. <br />Contribution requirements are established by the City, based on the contract terms with HealthPartners, Inc. The required <br />contributions are based on projected pay-as-you-go financing requirements. For the year ended December 31, 2023, the <br />.5 percent of covered-employee payroll. For fiscal year 2023, the City contributed $0 <br />to the plan. As of January 1, 2023, there were three <br />C. Actuarial Methods and Assumptions <br />$1,175,850 was measured as of January 1, 2023, and the total OPEB liability used to <br />calculate the total OPEB liability was determined by an actuarial valuation as of January 1, 2023. Roll forward procedures <br />were used to roll forward the total OPEB liability to the measurement date. <br />The total OPEB liability in the January 1, 2023 actuarial valuation was determined using the following actuarial <br />assumptions, applied to all periods included in the measurement, unless otherwise specified: <br />Discount Rate 4.05% <br />Payroll Growth Rate N/A <br />20-Year Municipal Bond Yield 4.05% <br />Inflation Rate 2.50% <br />Medical Trend Rate 8% degrading to 4.14% by 2027 <br />The discount rate used to measure the total OPEB liability was 4.05 percent as of January 1, 2023. Mortality rates were <br />based on the recently published PERA actuarial valuations. <br />The actuarial assumptions used in the January 1, 2023 valuation were based on input from a variety of published sources <br />of historical and projected future financial data. Each assumption was reviewed for reasonableness with the source <br />information as well as for consistency with the other economic assumptions. <br />78 <br />contributions are based on projected paycontributions are based on projected pay asas youyou go financing requirements. go financing requirements. For the year ended December 31, For the year ended December 31, 20232023 <br />.5 .5 percent of coveredpercent of covered-employee payroll. employee payroll. For fiscal year For fiscal year 20232023, the City contributed, the City contributed <br />o the plan. As of o the plan. As of January 1, January 1, 2023, there were, there were threethree <br />Actuarial Methods and AssumptionsActuarial Methods and Assumptions <br />$1,$1,175,850175,850 was measured as of was measured as of JanuaryJanuary 1, 20232023, and the total OPEB liability used to , and the total OPEB liability used to <br />calculate the total OPEB liability was determined by an actuarial valuation as of January 1, calculate the total OPEB liability was determined by an actuarial valuation as of January 1, 2023. Roll forward procedures . Roll forward procedures <br />were used to roll forward the total OPEB liability to the measurement date.were used to roll forward the total OPEB liability to the measurement date. <br />113