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CITY OF ORONO <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31, 2015 <br /> <br /> <br />(44) <br /> <br />NOTE 6 OTHER POSTEMPLOYMENT BENEFITS <br />At December 31, 2009, the City adopted GASB Statement No. 45, Accounting and <br />Financial Reporting by Employers for Postemployment Benefits Other than Pensions. The <br />City engaged an actuary to determine the City’s liability for postemployment healthcare <br />benefits other than pensions as of January 1, 2014. <br /> <br />A. Plan Description <br />The City provides benefits for retirees as required by Minnesota Statute §471.61 <br />subdivision 2b. Active employees, who retire from the City when over age 50 and with 20 <br />years of service, may continue coverage with respect to both themselves and their <br />eligible dependent(s) under the City’s health benefits program until age 65. Pursuant to <br />the provisions of the plan, retirees are required to pay the total premium cost. As of <br />December 31, 2015 there were approximately 53 active participants and 9 retired <br />participants receiving benefits from the City’s health plans. <br /> <br />B. Funding Policy <br />The City funds its OPEB obligation on a pay as you go basis. For fiscal year 2015, the <br />City contributed $66,078 to the plan. For governmental activities, other postemployment <br />benefits are generally liquidated through the General Fund. <br /> <br />C. Annual OPEB Cost and Net OPEB Obligation <br />The City’s annual other postemployment benefit (OPEB) cost (expense) is calculated <br />based on the annual required contribution (ARC), an amount actuarially determined in <br />accordance with the parameters of GASB Statement 45. The ARC represents a level of <br />funding that, if paid on an ongoing basis, is projected to cover normal cost each year and <br />amortize any unfunded actuarial liabilities over a period not to exceed 30 years. The <br />following table shows the components of the City’s annual OPEB cost for the year, the <br />amount actually paid from the plan, and changes in the City’s net OPEB obligation. <br /> <br />Annual Required Contribution 111,432$ <br />Interest on Net OPEB Obligation 12,972 <br />Adjustment to Annual Required Contribution (10,883) <br />Annual OPEB Cost (Expense) 113,521 <br />Contributions Made (66,078) <br />Increase in Net OPEB Obligation 47,443 <br />Net OPEB Obligation - Beginning of Year 253,534 <br />Net OPEB Obligation - End of Year 300,977$