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CITY OF ROSEVILLE, MINNESOTA NOTES TO FINANClAL STATEMENTS December 31, 2015 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 benefit 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 CHANGE IN ACCOUNTING PRINCIPLE For the year ended December 31, 2015, the City implemented GASB Statement No. 68, Accounting and Financial Repo�ting for Pensions and GASB Statement No. 71, Pension T�ansition foN Contributions Made Subsequent to the Measurement Date. This resulted in an adjustment to the beginning net position on the Statement of Activities of $(8,528,623) to add the beginning net pension liability, and an adjustment to the beginning net position on the Statement of Revenues, Expenses and Changes in Fund Net Position — Proprietary Funds of $(969,168) to add the beginning net pension liability. Note 7 GASB STATEMENTS ISSUED BUT NOT YET IMPLEMENTED GASB has issued GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits other than Pensions. The new statement requires governments in all types of OPEB plans to present more extensive note disclosures and required supplementary information (RSI) about OPEB liabilities. 77