OPEB Valuation 2017
Gallagher Benefit Services, Inc. p: 952.356.3840
3600 American Blvd. West, Suite 500 f: 866.743.5313
Bloomington, MN 55431 ajg.com
March 27, 2018
CONFIDENTIAL
Shari Rains
City of New Hope
srains@ci.new-hope.mn.us
Re: City of New Hope – GASB 43/45 Alternative Measurement Method
Dear Shari:
The attached exhibits provide the information needed for the City’s OPEB Notes to the Financial
Statements and Required Supplementary Information as of December 31, 2017.
These calculations have been performed under the Alternative Measurement Method as allowed by
GASB 43/45 for employers with fewer than one hundred plan participants. The biggest difference
between this method and an actuarial valuation are the simplification of assumptions used to value the
OPEB liabilities, which reduces the time and cost to complete the calculations.
If you have any questions, please call me at (952) 356-0720.
Sincerely,
Jennifer Turk, EA, FSA, MAAA
Actuarial Consultant
Present Value of Benefits (PVB)
Active 1,271,521
Inactive 127,037
Total PVB 1,398,558
Actuarial Accrued Liability (AAL)
Active 632,435
Inactive 127,037
Total AAL 759,472
Less: Assets -
Unfunded Actuarial Accrued Liability (UAAL)759,472
Normal Cost 56,705
Amortization of UAAL 27,124
Interest 3,353
Annual Required Contribution (ARC)87,182
Interest on Net OPEB Obligation 14,647
Adjustment to ARC (13,601)
Annual OPEB Cost 88,228
Expected Employer Contributions (32,324)
Increase in Net OPEB Obligation 55,904
Net OPEB Obligation (Prior Year)366,178
Net OPEB Obligation (End of Year)422,082
Percentage of Annual OPEB Cost Contributed 37%
Estimated Covered Payroll 6,176,197
UAAL as Percent of Payroll 12%
FISCAL YEAR ENDING DECEMBER 31, 2017
CITY OF NEW HOPE - GASB 43/45
ALTERNATIVE MEASUREMENT METHOD
Page 1 of 3
INPUT INFORMATION - Summary of Assumptions and Methods
The following simplified assumptions were used for the Alternative Measurement Method:
Retirement Age
Age 55 for Police & Fire, Age 63 for all others (based on PERA average rates)
Marital Status
Coverage at calculation date assumed to continue through retirement
Mortality
RP-2014 with MP-2016 generational improvements
Turnover
Non-group-specific age-based turnover data from GASB 45
Inflation Rate
2.75%
Discount rate
4.00%
Healthcare Trend
8.50% in 2017 decreasing 0.50% per year to an ultimate rate of 5.00%
Payroll Growth Rate
3.50%
Coverage Election
55% of future retirees are assumed to elect health coverage at retirement
Healthcare Claims Costs
Average group premium increased for age differences at 4.00% per year
Actuarial Cost Method
Entry Age Normal, UAAL amortized as a level percent of payroll over a 30-year period
Actuarial Value of Assets
The plan is not funded
CITY OF NEW HOPE - GASB 43/45
ALTERNATIVE MEASUREMENT METHOD
FISCAL YEAR ENDING DECEMBER 31, 2017
Page 2 of 3
INPUT INFORMATION - Summary of Plan Participants
Participant Counts
Active 88
Inactive 6
Total 94
Average Age
Active 46
Inactive 61
Average Service 11
INPUT INFORMATION - Summary of Plan Provisions
These provisions are the minimum allowed under Minnesota Statutes 471.61 and 299A.465 for local government
entities. At retirement, employees receiving a retirement or disability benefit, or eligible to receive a benefit, from
a Minnesota public pension plan (other than a volunteer firefighter plan)may continue to participate in the
employer group health insurance plan that the employee was a participant of immediately prior to retirement.
Employees may obtain dependent coverage at retirement only if the employee was receiving dependent coverage
immediately prior to retirement.For Officers or Firefighters disabled in the line-of-duty,the Officer’s or
Firefighter’s employer must continue payment of the employer’s contribution toward health coverage for the
Officer or Firefighter and their spouse, if the spouse was covered at the time of disability, until age 65.
CITY OF NEW HOPE - GASB 43/45
ALTERNATIVE MEASUREMENT METHOD
FISCAL YEAR ENDING DECEMBER 31, 2017
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