CAFR 2016

Deposit Agreement with the North Carolina Department of State Treasurer. The State Treasurer in her discretion may invest the proceeds in equities of certain publicly held companies and long or short term fixed income investments as detailed in G.S. 147-69.2(b) (1-6) and (8). Funds deposited are held in the State Treasurer’s, OPEB Long-Term Fund, 11%, OPEB Equity Fund, 63%, and the NC Short-Term Investment Fund, 26%. At June 30, 2016, the Plan assets totaled $15,182,164. A separate report was not issued for the Plan.

Membership of the Plan consisted of the following at December 31, 2014, the date of the latest actuarial valuation:

Law

General

Enforcement

Employees

Officers

Retirees

Total

Retirees receiving benefits

979

979

Active plan members

2,317 2,317

706 706

3,023 4,002

Total

979

Funding Policy The City will contribute toward the cost of the eligible retiree health and life insurance coverage based on the years of service at retirement. Dental coverage is provided at full cost to the retiree. The City has chosen to fund the healthcare benefits on a pay-as-you-go basis, with additional amounts contributed to prefund benefits, determined annually by management. The current Annual Required Contribution (“ARC”) or $8,711,948 is 5.95% of annual covered payroll. For the current year, the City contributed $4,734,307 (or 3.2% of annual covered payroll) toward actual benefit payments. The City obtains health care and dental coverage through a self-funded program and through a private insurer for life insurance benefits. The City’s obligation to contribute to the Plan is established and may be amended by the City Council during the budget process per the City annual budget ordinance. Determination of the amounts contributed by the City and retirees is made by the Employee Benefit Executive Committee, annually, upon review of current costs and trends. Summary of Significant Accounting Policies Post-employment claims and premiums expenditures are made from the Employee Risk Retention Fund (Internal Service Fund), which is maintained on the accrual basis of accounting. Internal charges are made to various other City funds for the respective active employees, based upon the pre-determined City contribution rate. Short-term money market instruments and deposits are reported at cost or amortized cost, which approximates fair value as of June 30, 2016. Certain longer term securities are valued at estimated market value, as determined by the State Treasurer. Administration costs of the OPEB Investment Fund are determined by inter-agency agreement with the North Carolina Department of State Treasurer. Annual OPEB Cost and Net OPEB Obligation The City’s annual OPEB cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the Plan, and changes in the City’s net OPEB obligation for post-employment benefits:

Annual Required Contribution Interest on Net Pension Obligation

$

8,711,948 199,691 (167,788) 8,743,851 (4,734,307) 4,009,544 2,754,352 6,763,896

Adjustment to Annual Required Contribution

Annual OPEB Cost (expense)

Contributions Made

Increase (decrease) in Net OPEB Obligation Net OPEB Obligation-Beginning of Year

Net OPEB Obligation-End of Year

$

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