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CITY OF EUGENE, OREGON <br />Notes to Basic Financial Statements <br />(5) Other Information, continued <br />(D) Other Post-employment Benefits (OPEB), continued <br />Plan Description, continued <br />The City also provides post-employment life insurance benefits to fully disabled employees through a single <br />employer defined benefit plan. The plan provides a waiver of life insurance premiums for employees who <br />participate in the City's life insurance plan who become totally disabled; the plan is underwritten by Standard <br />Insurance Company, whereby the City pays a premium rate for active and disabled employees, and Standard <br />Insurance Company provides term life insurance coverage. In the event the City changes life insurance <br />carriers, Standard. Insurance Company does not retain any liability for future death benefits. In changing life <br />insurance carriers, if the new carrier was unwilling to accept the liability for the disabled employees, the City <br />would be responsible for any future death benefits. <br />'. ) The City's post-employment life insurance benefit for disabled employees is an elective benefit offered by the <br />City, this benefit is subject to collective bargaining agreements. The amount of life insurance benefits that a <br />_.' disabled employee receives is based on the amount of coverage and the reduction pattern in effect at the time <br />of disablement. The coverage amount varies per employer group; the maximum benefit is $250,000. <br />(_) The City did not establish an irrevocable trust (or equivalent arrangement) to account for either plan. Instead, <br />- . the activities of the plans are reported in the City's Risk and Benefits Internal Service Fund. Neither plan issues <br />', ` -' a separate report. <br />Funding Policy <br />The City has the authority to establish and amend contribution requirements. The required contribution is <br />based on projected pay-as-you-go financing requirements. Since the City's healthcare plan is self-insured, the <br />annual required contributions can fluctuate. For the fiscal year ending June 30, 2008, the City's combined plan <br />contributions were $927,057. <br />j , Annual OPEB Cost and Net OPEB Obligation <br />(`j The City's annual other post-employment benefit cost (expense) is calculated based on the annual required <br />contribution of the employer, an amount actuarially determined in accordance within the parameters of GASB <br />45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost <br />;~ each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty <br />! ~` °' years. The following table shows the components of the City's annual OPEB cost for the fiscal year ending <br />(,. June 30, 2008, the amount actually contributed to the plans, and changes in the City's net OPEB obligation: <br />Annual required contribution $ 2,594,637 <br />Interest on net OPEB obligation 123,125 <br />Adjustment to the annual required contribution (160,189) <br />Annual OPEB cost (expense) 2,557,573 <br />Contributions made 927,057 <br />Increase in net OPEB obligation 1,630,516 <br />Net OPEB obligation, beginning of year 2,462,497 <br />Net OPEB obligation, end of year $ 4,093,013 <br />continued <br />