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2014 CAFR
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CITY OF ROSEVILLE, MINNESOTA <br />NOTES TO FINANClAL STATEMENTS <br />December 31, 2014 <br />F. Funded Status and Funding Progress <br />The City has no assets that have been inevocable deposited in a trust for future health benefits; <br />therefore, the actuarial value of assets is zero. The funded status of the plan was as follows: <br />Actuarial <br />Valuation <br />Date <br />Unfiznded UAAL as <br />Actuarial Actuarial Annual a Percentage <br />Actuarial Accrued Accrued Funded Covered of Annual <br />Value ofAssets Liability (AAL)'� Liability (UAAL) Ratio Payroll Covered Payroll <br />January 1, 2008 $ - $ 1,833,845 $ 1,833,845 <br />January 1, 2011 $ - $ 1,709,742 $ 1,709,742 <br />January 1, 2014 $ - $ 1,772,661 $ 1,772,661 <br />*Using the projected unit credit actuarial pay cost method. <br />G. Actuarial Methods and Assumptions <br />0% $ 9,528,355 19.2% <br />0% $ 10,169,482 16.8% <br />0% $ 10,706,122 16.6% <br />Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and <br />assumptions about the probability of occurrence of events far into the future. Examples include <br />assumptions about future employment, mortality and the health care cost trend. Amounts <br />determined regarding the funded status of the plan and the annual required contributions (ARC) <br />of the employer are subject to continual revision as actual results are compared with past <br />expectations and new estimates are made about the future. The schedule of funding progress, <br />presented as required supplementary information following the notes to financial statements, <br />presents multi-year trend information that shows whether the actuarial value of plan assets is <br />increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. <br />Projections of benefits for financial reporting purposes are based on the substantive plan (the plan <br />as understood by the employer and plan members) and include the types of benefits provided at <br />the time of each valuation and the historical pattern of sharing of benefit costs between the <br />employer and plan members to that point. The actuarial methods and assumptions used include <br />techniques that are designed to reduce the effect of short-tenn volatility in actuarial accrued <br />liabilities and the actuarial value of assets, consistent with the long-term perspective of the <br />calculations. <br />In the January 1, 2014 actuarial valuation, the projected unit credit actuarial cost method was <br />used. The actuarial assumptions included a 4.5% investment rate of return (net of investment <br />expenses), salary increases of 3.0% (only used to bring salaries into the valuation year) and an <br />initial annual health care cost trend rate of 7.5% reduced by .25% each year to arrive at an <br />ultimate health care cost trend rate of 5.0% over 10 years. The health care cost trend rate includes <br />a 2.5% inflation rate. The actuarial value of assets was $0. The plan's unfunded actuarial <br />accrued liability is being amortized using the level percentage of projected payroll method over <br />30 years on a closed basis. The remaining amortization period at December 31, 2014, is 23 <br />years. <br />.• <br />
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