The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation as of June 30, 2013 are summ arized as follows:
Annual Year Ended
June 30,2013 June 30, 2012 June 30, 201 1
OPEB Cost
$48,830 $ 48,830 $ 52,149
Percentage of Annual OPEB Cost
Contributed from City (38.87%)
148.3o/o 4.60/0
Net OPEB Obligation
$343,139 $275,329 $298,903
Funded Status and Fundino Prooress - As of July 1, 2011,ïhe most recent actuarial valuation date for the period July 1 , 2012 through June 30, 2013, the actuarial accrued liability was $525,162, with no actuarial value of assets, resulting in an unfunded actuarial accrued liability (UAAL) of $525,162. The covered payroll (annual payroll of active employees covered by the plan) was $1 1,619,949 and the ratio of the UAAL to covered payroll was 4.5%. As of June 30, 2013, there were no trust fund assets.
Actuarial Methods and Assumptions - Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the
future. Examples include assumption about future employments, mortality and the health care cost trend. Actuarially determined amounts are subject to continual review as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information in the section following the Notes to Financial Statements, will present multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
Projections of benefits for financial reporting purposes are based on the plan as understood by the employer and the 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 effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.
As of the July 1, 2011 actuarial valuation date, the projected unit credit actuarial cost method was used. The actuarial assumption includes a 5% discount rate based on the City's funding policy. The projected annual medical trend rate is 9%. The ultimate medical trend rate is 6%. The medical trend rate is reduced 0.5% each year until reaching the 6% ultimate trend rate. An inflation rate of 0% is assumed for purposes of this computation.
Mortality rates are from the RP2000 Group Annuity Mortality Table, applied on a gender-specific basis Annual retirement and termination probabilities were developed from a combination of the retirement probabilities from MFPRS|Actuarial Report, the IPERS Actuarial Report, and the City's experience.
Projected claim costs of the health plan are $675.42 per month for retirees less than age 65 and $443.17 per month for retirees who have attained age 65. The salary increase rate was assumed to be 3% per year. The UAAL is being amortized as a level percentage of projected payroll expense on an open basis over 30 years.
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