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CITY OF ROSEVILLE NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2012 NOTE 6 —OTHER POST - EMPLOYMENT BENEFITS (Continued) G. Actuarial Methods and Assumptions (Continued) In the January 1, 2011 actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions included a 4.5% investment rate of return (net of investment expenses), salary increases of 2.0% (only used to bring salaries into the valuation year) and an initial annual health care cost trend rate of 8% reduced by .5% each year to arrive at an ultimate health care cost trend rate of 5.0% over 6 years. The health care cost trend rate includes a 2.5% inflation rate. The actuarial value of assets was $0. The plan's unfunded actuarial accrued liability is being amortized using the level percentage of projected payroll method over 30 years on a closed basis. The remaining amortization period at December 31, 2010, was 27 years. For the governmental activities, other postemployment benefits are generally liquidated through the governmental fund in which an employee is assigned. NOTE 7 — CHANGE IN ACCOUNTING PRINCIPLE For the year ended December 31, 2012, the City implemented Governmental Account Standards Board (GASB) Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. This action resulted in the establishment of categories outside of assets and liabilities titled deferred inflows. The statement also retitled Net Assets to Net Position. The City also implemented GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, resulting in accounts formerly presented as liabilities in the governmental fund statements being reclassified as deferred inflows of resources. NOTE 8 — GASB STATEMENTS ISSUED BUT NOT YET IMPLEMENTED GASB Statement No. 68 replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers and Statement No. 50, Pension Disclosures, as they relate to governments that provide pensions through pension plans administered as trusts or similar arrangements that meet certain criteria. Statement No, 68 requires governments providing defined benefit pensions to recognize their long -term obligation for pension benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of pension benefits. F