comprehensive annual financial report - City of St. Petersburg

CITY OF ST. PETERSBURG, FL
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2010
NOTE 21 – POST-RETIREMENT HEALTH BENEFITS – (Continued)
September 30, 2010 September 30, 2009
Annual Required Contribution $12,455,000 $14,353,000
Interest on the Net OPEB Obligation 872,000 458,000
Adjustment on the ARC (802,000) (421,000)
Annual OPEB Costs $12,525,000 $14,390,000
Less: Contributions made (1) (6,187,000) (5,171,000)
Increase in Net OPEB Obligation $6,338,000 $9,219,000
Net OPEB Obligation – beginning of year 19,388,000 10,169,000
Net OPEB Obligation – end of year $25,726,000 $19,388,000
(1) = The percentage contributed was 49.7% and 35.9% for fiscal year ended September 30, 2010 and 2009 respectively.
The funded status of the plan was as follows:
Actuarial Valuation Date July 30, 2009 September 26, 2008
Actuarial accrued liability (AAL) $166,670,000 $184,687,000
Actuarial value of plan assets - -
Unfunded actuarial accrued liability (UAAL) $166,670,000 $184,687,000
Actuarial value of assets as a % of the AAL 0% 0%
Actuarial valuations involved estimates of the value of reported amounts and assumptions about the
probability of events far into the future, and actuarially determined amounts are subject to continual
revision as actual results are compared to past expectations and new estimates are made about the future.
The schedule of government contributions and two year trend information along with the schedule of
funding progress for the current year and two years prior (the dates of the actuarial valuations as required)
can be found on page E-4 in the Required Supplementary Information.
Actuarial Methods of Assumptions
Calculations are based on the types of benefits provided under the terms of the substantive plan, including
the method of sharing of costs between the employer and plan members.
In the October 1, 2008 actuarial valuation, the Projected Unit Credit actuarial cost method was used. The
actuarial assumptions included a 4.5% investment rate of return (net of administrative expenses) and an
annual healthcare cost trend rate of 10% initially, reduced by 1% per year to an ultimate rate of 5% after
five years. Both rates include a 3% inflation assumption. The unfunded actuarial accrued liability is
being amortized as a level percentage of payroll over an open 30 year period.
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