C.A.F.R., FY 2010-11 - Laserfiche WebLink

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City of Paris, Texas Notes to Financial Statements September 30, 2011 V. Other Information (Continued) G. Postemployment Benefits Other Than Pensions The City has in effect a single employer plan adopted by City Council resolution whereby persons who retire before age sixty-five will be provided health care coverage until they become sixty- five. The City's contributions are financed on a pay-as-you-go basis and for the year ended September 30, 2011, the contributions were approximately $129,000 for 24 retired employees. An additional 22 employees were eligible for this benefit. Calculations are based on benefits provided under the plan in effect at the time of each valuation and on the pattern of sharing of costs. Actuarial information as of September 30, 2011: Development of the Annual Required Contribution Employer Normal Cost Amortization of UAAL Annual Required Contribution (ARC) Percentage Contributed 2009 2010 2011 $ 16,423 $ 20,637 $ 73,791 121,843 121,843 143,761 $ 138,266 $ 142,480 $ 217,552 86% 76% 68% Amount of Contribution $ 118,747 $ 108,331 $ 147,885 Interest on Net Obligation $ - $ 878 $ 2,415 ARC Adjustment $ - $ 814 $ 3,397 Increase in Net Obligation $ 19,519 $ 34,149 $ 68,684 Net Obligation $ 19,519 $ 53,668 $ 122,352 The ARC for 2009 and 2010 has been calculated to remain at a level dollar amount and the unfunded actuarial accrued liabilities were amortized as a level dollar amount over a period of 15 years. For 2011, a closed amortization period for the unfunded actuarial accrued liabilities is 27 years, which is appropriate because the plan has no benefits to employees hired after October 1, 2004. Inflation rate assumption is 3%, healthcare cost trend rate is 3%, and the rate of investment return is 4.5%. The actuarial calculation for the plan reflects a long-term perspective. The Projected Unit Credit Cost Method was used in the valuation. The actuarial present value of benefits allocated to the valuation year is the Normal Cost. The actuarial present value of benefits allocated to all prior periods is the Actuarial Accrued Liability. Actuarial gains (losses) as they occur, reduce (increase) the Unfunded Actuarial Accrued Liability. The City's subsidy for a retiree covered by the plan is assumed to increase 3%. Rates of salary increase vary from 3.5% to 5.25% based on years of service. 47