COG Comprehensive Annual Financial Report

Plan Membership Membership of the Plan consisted of the following at June 30, 2016, the date of the latest actuarial valuation:

Law

General

Enforcement

Employees

Officers

Firefighters

Retirees

Total

Retirees receiving benefits

1,544

1,544 2,828 4,372

Active plan members

1,657 1,657

638 638

533 533

Total

1,544

Summary of Significant Accounting Policies Postemployment 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, 2018. 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. Contributions 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 Actuarially Determined Contribution (“ADC”) or $11,780,773 is 8.6% of annual covered payroll. For the current year, the City contributed $7,224,634 (or 5.3% 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. The Plan is accounted for as an OPEB Benefit Trust Fund. Investment Policy and Long-Term Expected Rate of Return Investment of the OPEB Trust funds are made pursuant to a Deposit Agreement with the North Carolina Department of State Treasurer. The State Treasurer in his 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 Equity Index Fund, 64.87%, Bond Index Fund, 31.21%, and the Short Term Investment Fund, 3.92%. At June 30, 2018, the Plan assets totaled $20,553,581. A separate report was not issued for the Plan. The Plan’s investment policy, adopted by the City Council in April 2017, allows for investment in instruments authorized by G. S. 159-30 as well as investments available to the North Carolina State Treasurer when managing funds with the same purpose. The investment policy may be amended by a majority vote of Council members. The following was the City Council’s adopted asset allocation policy as of June 30, 2018:

Target

Long-TermExpected Real Rate of Return

Asset Class

Allocation

Equity IndexFund Bond IndexFund

60.0% 40.0% 100.0%

4.46% 0.64%

Total

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