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CTTY OF ROSEVILLE, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2016 Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benetit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effect of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the January 1, 2014 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 3.0% (only used to bring salaries into the valuation year) and an initial annual health care cost trend rate of 7.5% reduced by .25% each year to arrive at an ultimate health care cost trend rate of 5.0% over 10 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, 2015, is 22 years. Note 6 PRIOR PERIOD ADJUSTMENT AND CHANGE IN ACCOUNTING PRINCIPLE Prior Period Adjustment The government-wide and proprietary-fund financial statements were adjusted for an error in earned revenue for $154,650, which was determined to be unearned as of December 31, 2016. The unearned grant funds were returned to the granting agency in 2016. The government-wide and proprietary fund statements were adjusted for the errors indicated above. A summary of the corrections to net position are as follows: Net position, January 1 Net position increase (decrease): Overstated revenue correction Net position, January 1, as restated Government-Wide Business-Type Activities Proprietary Funds Storm Drainage $ 30,859,340 $ (154,650) 9, ll 2,697 154,650 $ 30,704,690 $ 8,958,047 77