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63

City of Raleigh

Financial Section

All active full‐time employees are eligible for membership.  At December 31, 2015, the plan membership consisted of: 

Law enforcement officers     

  719 

Firefighters 

  554 

General employees 

2,471 

Retirees  

1,836 

Total  

5,580

Summary of significant accounting policies: 

Funding Policy.

The City pays the full cost or almost full cost of coverage, depending on coverage plan selected, for 

health care and life insurance benefits, and a $100 monthly Medicare supplement for eligible retirees.  The City has 

chosen to fund the plan benefits based on an actuarially determined annual required contribution. For the current 

year the City contributed $13,949,558 or 7.0% of the annual covered payroll.  Contributions made by retirees for 

dependent coverage and Medicare supplement premiums were $2,271,037.  

Basis of Accounting

.

  Financial statements for the plan are prepared using the accrual basis of accounting.  

Employer contributions are recognized when due and when the City has made a formal commitment to provide 

contributions. Benefits are recognized when due and payable in accordance with the plan terms. 

Method used to Value Investments

.

The City pools money from several funds, including the OPEB trust fund.  All 

such pooled cash and investments are considered cash and cash equivalents, which approximates fair value.     

The City’s annual pension cost and net OPEB obligation for the current year were as follows: 

Employer annual required contribution

14,084,837

$                 

Interest paid on OPEB obligation

204,580

Adjustment to annual required contribution

(182,322)

Annual OPEB cost

14,107,095

Employer contributions made for current fiscal year

(13,949,558)

Increase in net OPEB obligation

157,537

Net OPEB (asset) obligation beginning of fiscal year

2,922,573

Net OPEB (asset) obligation end of fiscal year

3,080,110

$                   

The annual required contribution for the current year was determined as part of the December 31, 2015 actuarial 

valuation using projected unit credit actuarial cost method.  The actuarial assumptions included (a) 7.0% investment 

rate of return and (b) projected medical cost trend rates of 7.75% to 5.0%, including an inflation component of 3.0%. 

The actuarial value of assets was market value.  The unfunded actuarial accrued liability is being amortized as level 

percentage of pay on a closed basis.  The remaining amortization period was 23 years.  

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