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CITY OF EUGENE, OREGON <br />Notes to Basic Financial Statements <br />(5) Other Information, continued <br />(D) Other Post-emoloyment Benefits (OPEB), continued <br />Annual OPEB Cost and Net OPEB Obligation, continued <br />The City's annual OPEB cost, the contribution, the percentage of annual OPEB cost contributed to the plans, <br />and the net OPEB obligation for 2008 and the preceding year were as follows: <br />Fiscal year Annual <br />ending June 30 OPEB cost <br />Percentage of <br />annual OPEB <br />Contribution cost contributed <br />Net OPEB <br />obligation <br />2007 $ 2,797,017 <br />2008 2,557,573 <br />Funded Status and Funding Progress. <br />914,520 33% <br />927,057 36% <br />2,462,497 <br />4,093,013 <br />As of June 30, 2007, the most recent actuarial valuation date, the actuarial accrued liability for benefits was <br />$22,854,225, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability of <br />$22,854,225. The covered payroll (annual payroll of active employees covered by the plans) was $75,075,500, <br />and the ratio of the UAAL to the covered payroll was 30 percent. <br />For the fiscal year ending June 30, 2008, the City has set aside $914,384 to pay for future post-employment life <br />insurance benefits for disabled employees, which is included in the unrestricted portion of net assets in the Risk <br />and Benefits Internal Service Fund. Since these assets have not been placed in a qualified trust (or equivalent <br />arrangement) they have not been recognized as part of the actuarial valuation. <br />Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions <br />about the probability of occurrence of events into the future. Examples include assumptions about future. <br />employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status. of the <br />plan and the annual required contributions of the employer are subject to continual revision as actual results <br />are compared with past expectations and new estimates are made about the future. The schedule of funding <br />progress, presented as required supplementary information, following the notes to the financial statements, <br />presents multiyear trend information about whether the actuarial value of plan assets is increasing or <br />decreasing over time, relative to the actuarial accrued liabilities for benefits. <br />Actuarial Methods and Assumptions <br />Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as <br />understood by the employer and the plan members) and include the types of benefits provided at the time of <br />each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to <br />that point. The actuarial methods and assumptions used include techniques that are designed to reduce the <br />effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the <br />long-term perspective of the calculations. <br />The June 30, 2007 actuarial valuations for the healthcare plan and the post-employment life insurance benefits <br />for disabled employees were based on the entry age normal and the projected unit credit actuarial cost <br />methods, respectively. The actuarial assumptions for both valuations included an investment return of 5.0%. <br />The healthcare plan actuarial valuation included a healthcare cost inflation trend rate of 9.0% in 2007 <br />decreasing to 6.0% in 2020. The unfunded actuarially accrued liability and the gains and losses for both plans <br />are amortized as a level dollar amount over an open period of 30 years. <br />continued <br />74 <br />