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GROUP
September 29, 2008
Ms. Kelli Wick
City of Brooklyn Center
6301 Shingle Creek Parkway
Brooklyn Center, MN 55430
Re: January 1, 2008 GASB No. 45 Actuarial Valuation of OPEB
Dear Ms. Kelli Wick:
Stanton Group is pleased to present the January 1, 2008 GASB No. 45 Actuarial
Valuation of the postemployment benefits provided by the City of Brooklyn Center
(City). This Actuarial Valuation is based on Governmental Accounting Standards Board
(GASB) Statement No. 45 and No. 43.
The City's Actuarial Valuation is one of 36 valuations completed by Stanton Group for
LOGIS Members. A listing of the 36 participating Members is shown in the Summary
of Plan Participants on page 12.
Background
GASB Statement No. 45, Accounting and Financial Reporting by Employers for
Postemployment Benefits Other Than Pensions, applies to all state and local
governmental entities that provide Other Postemployment Benefits (OPEB). Examples
of OPEB include medical, prescription drug, dental, vision, life insurance, disability,
and long -term care.
OPEB represent compensation to employees for services they provide that are earned
during employment. Currently, most entities use pay -as- you -go financing and
financial reporting for OPEB and recognize an expense only when OPEB obligations
are paid. GASB No. 45 requires accrual -basis financing and financial reporting that
recognizes an expense as benefits are earned and recognizes cumulative past
accruals over a specified amortization period.
GASB No. 45 requires retiree benefits to be based on claims costs, or age - adjusted
premiums, of the retirees. The Statement requires this approach because medical
and prescription drug costs increase with age. When active employees and retirees
are blended together to develop health care premiums there is an inherent subsidy of
retiree health care costs by active employee health care costs. Retirees' true health
care costs are, on average, greater than active employees' health care costs; so if
both subgroups pay the same blended premium for their benefits, retirees are paying
less than they would if their premiums were calculated based solely on their own
Corporate Headquarters
3405 Annapolis Ln N, Suite 100, Minneapolis, MN 55447
763 278 4000 1 763 278 4007 (fax) I www.stanton- group.com
An Affirmative Action /Equal Opportunity Employer
Ms. Kelli Wick
September 29, 2008
Page 2
claims costs. Active employee premiums subsidize the retiree premiums and that
subsidy, know as the implicit rate subsidy, creates a liability under GASB No. 45.
Minnesota Statutes 471.61 and 299A.465 require public sector employers to provide
eligible retirees and dependents continuation in the group health plan until age 65.
The Statutes also indicate that employers can not charge retirees more than the
group blended premium rates causing all Minnesota public employers to have the
implicit rate subsidy and corresponding OPEB liability. Employers with officers or
firefighters who are disabled in the line of duty have additional OPEB liability beyond
that created by the implicit rate subsidy because these employers also pay all or a
portion of the group blended premium for officers or firefighters disabled in the line
of duty.
Benefits Valued in the Actuarial Valuation
The benefits valued in the Actuarial Valuation include health care benefits mandated
under Statute 471.61 for all LOGIS Members and Statute 299A.465 for LOGIS Members
who have officers or firefighters. If applicable, this Actuarial Valuation addresses any
City benefits in excess of those required by Statute known by Stanton Group on page 17
and indicates whether or not those benefits were included in this Actuarial Valuation.
Valuation Approach and Methodology
Our general approach is to apply turnover, retirement, disability, and mortality
probabilities to the current census group, along with assumed health care costs
(medical, prescription drug, and administrative) and participant contributions, to
project all future net benefits (health care costs less contributions) paid on behalf of
the current census group, including their dependents, after retirement or disability.
These future net benefits are then discounted to the valuation date using a discount
rate that reflects the long -term rate of return of the assets assumed to pay the
benefits.
Based on medical and prescription drug claims history and enrollment summaries
provided by Medica and HealthPartners, we calculated average medical and
prescription drug claims costs per member. We applied administration costs and
factors for health care trend, aging, gender and plan values to estimate the 2008
retiree medical and prescription drug costs. These costs are referred to as per capita
claims costs and are illustrated in the Summary of Actuarial Assumptions and Methods
section of the report. Future per capita claims costs are developed by increasing the
current 2008 per capita claims costs with health care trend rates shown in the
Summary of Actuarial Assumptions and Methods section.
Ms. Kelli Wick
September 29, 2008
Page 3
Future retiree contributions are also developed by adjusting the current retiree
contributions shown in the Summary of Plan Provisions section with the health care
trend rates shown in the Summary of Actuarial Assumptions and Methods section.
Our projection of future net benefits is also based on demographic assumptions such
as employee turnover, retirement, disability, mortality, marriage, and spouse age
difference. Where appropriate, the Actuarial Valuation uses demographic
assumptions from the most recent PERA pension actuarial valuation covering City
employees and retirees. Other assumptions regarding turnover and health care
elections at retirement are based on either actual City experience or combined
experience of all 36 participating LOGIS Members.
Our actuarial model computes the present value of all future net benefits and
allocates a portion of that present value to the current fiscal year. The methodology
of that allocation is called an "Actuarial Cost Method ". GASB No. 45 allows the
employer the choice among six different actuarial cost methods. The three primary
methods are known as Projected Unit Credit, Entry Age Normal, and Aggregate. The
other three methods are variations of the primary methods. Our Actuarial Valuation
provides results using the Projected Unit Credit actuarial cost method.
The present value of the future net benefits is based on a discount rate reflecting the
long -term rate of return of the assets assumed to pay the benefits. If the City
prefunds benefits in a qualified OPEB trust for the exclusive purpose of paying
postemployment health care benefits and City contributions are at least as great as
the Annual Required Contribution (ARC funding), then the discount rate used should
be the same as the long -term rate of return of the assets in the OPEB trust. If the
City does not prefund benefits and pays benefits when due (pay -as- you -go funding)
then the discount rate used should be the same as the long -term rate of return of the
City's general assets. Our Actuarial Valuation provides results using 4.5% and 8.5%
discount rates. The 4.5% discount rate represents no prefunding (pay -as- you -go
funding) and is the assumed rate of return of the City's general assets. The 8.5%
discount rate represents prefunding (contributions equal to the ARC) and is the
assumed rate of return of the assets in an OPEB trust.
Notes to the Financial Statements
Notes to the Financial Statements (Notes) are shown on page 7 assuming the City
continues funding benefits using the pay -as- you -go method (4.5% discount rate) and
page 8 assuming the City prefunds benefits by contributing the Annual Required
Contribution into a qualified OPEB trust. These Notes also consider the
implementation year of GASB No. 45 indicated by the City. If the City indicated an
implementation year of 2008, the Notes will include information for both 2008 and
Ms. Kelli Wick
September 29, 2008
Page 4
2009. If the City indicated an implementation year of 2009, the Notes will include
information only for 2009.
We appreciate the assistance that the City has given in providing information Stanton
Group requested to complete the Actuarial Valuation.
If you would like an electronic copy (PDF) of the enclosed Actuarial Valuation please
email Chris Grabrian at cgrabrian@stanton- group.com or Phil Souzek at
psouzek@stanton- group.com. If you have any questions regarding the Actuarial
Valuation, please contact Chris Grabrian at (763) 278 -4022 or Phil Souzek at (763)
278 -4176.
Sincerely,
Christopher L. Grabrian, ASA, MAAA, EA Phillip A. Souzek
Actuarial Consultant Actuarial Analyst
City of Brooklyn Center
GASB No. 45
Actuarial Valuation
ft 24-
�� --� January 1, 2008
STANTON 17 r -,, s.
GROUP
STANTON Together, we're better,
GROUP
City of Brooklyn Center
GASB No. 45 Actuarial Valuation
Table of Contents
Actuarial Certification 1
Executive Summary 2
Governmental Accounting Standards No. 43 & No. 45 Background 3
Summary of Liabilities and Annual Costs
Actuarial Present Value of Benefits
Required by State Statutes 4
In Excess of State Statutes 4
Unfunded Actuarial Accrued Liability 5
Annual Required Contribution 5
Pay -As- You -Go Cost Projections for 2008 -2040 6
Governmental Accounting Standards No. 45 Requirements
4.5% Discount Rate (Pay -As- You -Go Funding) 7
8.5% Discount Rate (ARC Funding) 8
Input Information
Summary of Plan Participants
City of Brooklyn Center 9
LOGIS Participating Members 12
Summary of Plan Provisions
Required by State Statutes 15
In Excess of State Statutes 17
Health Plan Benefits 18
Actuarial Assumptions and Methods 23
Governmental Accounting Standards No. 43 tt No. 45 Terminology
Actuarial Cost Methods 30
Definitions 36
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
ACTUARIAL CERTIFICATION V
Januar 1, 11: to December 11:
In our opinion, the following report presents fairly the January 1, 2008 Actuarial Valuation of the
City of Brooklyn Center (the City) postemployment benefits other than pensions (medical and
prescription drug) and has been prepared in accordance with Statement No. 43 and Statement No.
45 of the Governmental Accounting Standards Board (GASB) and with generally accepted actuarial
principles and practices. Actuarial computations under GASB No. 43 and GASB No. 45 are for
employer and plan accounting and financial reporting requirements. Determination for purposes
other than meeting employer and plan accounting and financial reporting requirements may be
significantly different from the results reported in this valuation.
This valuation has been conducted with reliance upon information provided to us by the City,
Medica and HealthPartners regarding participant data, plan provisions, and other matters. The
accuracy of information in this valuation is dependent on the quality and completeness of the
information provided to us. We have reviewed the information provided to us for general
reasonableness. This valuation was performed on the basis of the participant data, plan provisions,
actuarial assumptions, and actuarial methods stated in this report.
The actuarial assumptions and actuarial methods used in this valuation were selected by the City
with the agreement of Stanton Group. In our opinion, the actuarial assumptions used (a) each, and
in the aggregate, are reasonably related to the experience of the plan and to reasonable
expectations, and (b) in the aggregate, represent our best estimate of anticipated experience
under the plan.
The actuary is a member of the American Academy of Actuaries and meets the Qualification
Standards of the American Academy of Actuaries to render the actuarial opinion contained in this
valuation.
Christopher L. Grabrian, A.S.A., M.A.A.A., E.A. Phillip A. Souzek
Enrollment Number 08 -06457 Actuarial Analyst
9/29/2008 9/29/2008
Date Date
STANTON Together, we're better.
ROUP I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
EXECUTIVE SUMMARY M1
Januar 1, 11: to December 11:
The table below highlights the January 1, 2008 liabilities and the January 1, 2008 to December 31,
2008 annual costs for the City's Other Postemployment Benefits (OPEB) related to medical and
prescription drug coverage. The liabilities and annual costs are presented using two discount rates.
The 4.5% discount rate represents funding benefits using the pay -as- you -go method and the 8.5%
discount rate represents funding benefits by contributing the Annual Required Contribution (ARC)
into a GASB No. 43 and No. 45 qualified trust.
Actuarial Liabilities
Actuarial Present Value of Benefits $ 5,795, 714 $ 3
as a % of total payroll* 67.36% 41.67%
Actuarial Accrued Liability $ 3 $ 2 721, 251
as a % of total payroll's 46.44% 31.63%
Annual Required Contributions
Annual Required Contribution $ 314 $ 262,629
as a % of total payroll's 3.65% 3.05%
Pay -As- You -Go Cost $ 158,734 $ 158,734
as a % of total payroll* 1.84% 1.84%
Estimated January 1, 2008 to December 31, 2008 total payroll is $8,604,036.
2 STANTON Together, we're better.
ROUR I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
GOVERNMENTAL ACCOUNTING STANDARDS NO, 43 Et NO, 45 BACKGROUND
Background
The Governmental Accounting Standards Board (GASB) issued Statements No. 43 and No. 45 in
January 2004. GASB No. 43 and GASB No. 45 address the liabilities associated with Other
Postemployment Benefits (OPEB) that are not pensions. OPEB primarily relates to retiree health
care, but also includes other benefits such as life insurance, disability, and long -term care. GASB
No. 43 addresses the financial reporting for postemployment benefit 1p ans other than pension plans
and is generally applicable once a qualified trust is implemented for pre- funding OPEB. GASB No.
45 addresses the accounting and financial reporting by employers for postemployment benefits
other than pensions.
GASB No. 43 and No. 45 require changing from a pay -as- you -go basis to accrual basis accounting for
postretirement benefits other than pensions. Under accrual basis accounting, employers recognize
a portion of the total liabilities during each fiscal year as an expense. This fiscal year expense
considers liabilities accrued to date, as well as benefits earned during the current fiscal year.
GASB No. 43 and No. 45 will be phased -in based on the annual revenue of the employer for the
fiscal year ending after December 15, 1999. GASB No. 45 is effective for fiscal years beginning
after December 15, 2006 for employers with $100 million or more in revenue, December 15, 2007
for employers with $10 to $100 million in revenue, and December 15, 2008 for employers with less
than $10 million in revenue. It is our understanding that GASB No. 45 is effective for the 2008 fiscal
year for the City and will be implemented during the 2008 fiscal year. GASB No. 43 is effective one
year prior to the effective date of GASB No. 45, but is not applicable until assets are funded into a
trust that meets the requirements of GASB No. 43 and No. 45.
Plan Provisions
Plan provisions describe the arrangement that an employer has undertaken to provide its employees
with benefits after they retire. Provisions of the plan may be written, spoken, or implied by a well -
defined practice of paying postemployment benefits. The plan provisions for the City's OPEB Plan
are summarized in the Summary of Plan Provisions section and includes provisions required by
Minnesota State Statutes, provisions in excess of Minnesota State Statutes, and specific health plan
benefits.
Actuarial Assumptions and Methods
Actuarial assumptions and methods used in determining GASB No. 43 and No. 45 liabilities are
selected in accordance with established actuarial standards. Each actuarial assumption, such as
turnover, retirement, disability, mortality, dependency status, spouse age differential, participant
election, per capita claims costs, health care trend rates and discount rate, is used to estimate the
occurrence of future events affecting postemployment benefit costs. Actuarial assumptions and
methods used in this valuation are described in the Summary of Actuarial Assumptions and Summary
of Actuarial Methods sections of this report. Additional assumptions for Members with plan
provisions in excess of State Statutes are included in the Summary of Plan Provisions - In Excess of
State Statutes section.
3 STANTON Together, we're better.
ROUR I
4
Summary of Liabilities
� � and Annual Costs
STANTON Topether, we're better.
GROUP
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
SUMMARY OF .; COSTS
Discount Actuariat Present Vatue Of Benefits ( PVB )
LmAmm"m ;mr(Pay-As-You-Go Fundin ( ARC Fundin
. • Discount
Provisions Required by State Statutes
• Actives - Coordinated Plan Participants $ 1 $ 893,859
• Actives - Police Et Fire Fund Participants 2 992,076
• Retirees - Coordinated Plan Participants 86,665 67,834
• Retirees - Police Et Fire Fund Participants 903,764 663,237
Total $ 4,460, 632 $ 2
Provisions In Excess of State Statutes
• Actives - Coordinated Plan Participants $ 622,731 $ 432,072
• Actives - Police Et Fire Fund Participants 350,345 217,937
• Retirees - Coordinated Plan Participants 29,895 28,671
• Retirees - Police Et Fire Fund Participants 332 289,767
Total $ 1 $ 968,447
Total Present Value of Benefits $ 5 $ 3
4 STANTON Together, we're better.
FAO U P I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
LIABILITIES SUMMARY OF
Unfunded Actuarial Accrued Liabilit and Annual Re Contribution
Discount Ratedq • Discount •
emro - As - You - Go ' Funding) ( ARC F un di ng )
Actuarial Present Value of Benefits $ 5 $ 3
Unfunded Actuarial Accrued Liability
• Actuarial Accrued Liability $ 3 $ 2,721,251
• Actuarial Value of Assets 0 0
• Unfunded Actuarial Accrued Liability $ 3 $ 2,721
Present Value of Future Normal Costs $ 1,799, 578 $ 864
Annual Required Contribution
• Normal Cost $ 176,464 $ 101,843
• Amortization of UAAL 124,191 140,211
• Interest on above amounts to end of year 13,529 20,575
• Annual Required Contribution $ 314 $ 262,629
5 STANTON Together, we're better.
ROUR I
F
F
Pa Cost Projections
for 2008-2040
F
STANTON Tovether, we're better.
GROUP
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
• • COST " FOR 2008-2040
The table below provides the benefits of retirees and active employees after retirement or
disability. Benefits, also known as the pay -as- you -go costs, are the expected claims plus
administration costs less participant contributions. These projections are based on retirees and
active employees as of January 1, 2008 and do not include future hires.
4 9- . ' . �
2008 $ 158,734
2009 167,010
2010 209
2011 248,810
2012 290,041
2013 316
2014 355,191
2015 324,931
2016 372
2017 365,343
2018 370,266
2019 416,042
2020 375,830
2021 432,095
2022 440,085
2023 434
2024 441,098
2025 463,136
2026 382
2027 375,549
2028 376,139
2029 397,921
2030 431,390
2031 349,478
2032 342,618
2033 287
2034 285,762
2035 270,948
2036 264
2037 229,625
2038 228,868
2039 193,610
2040 171,398
6 S Together, we're better.
ROUR I
Governmental Accountin
9
Standards No. 45 Re
, 4 d
STANTON To we're better.
GROUP -1
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
GOVERNMENTAL ACCOUNTING STANDARDS NO., 45 REQUIREMENTS
Discount Rate (Pay-As-You-Go Funding
The information below is required for Note Disclosures and Required Supplementary Information for
employer reporting. This information is based on a 4.5% discount rate, Pay -As- You -Go funding,
Projected Unit Credit actuarial cost method, 30 -year amortization of the UAAL increasing at 5.0% per
year (the payroll growth rate), and implementation of GASB No. 45 in fiscal year 2008.
Notes to the Financial Statements
Net OPEB Obligation
If: oi•
Annual Required Contribution $ 314 $ 314
Interest on Net OPEB Obligation 0 6
Adjustment to Annual Required Contribution (0) (4
Annual OPEB Cost $ 314 $ 316,086
Employer Contributions with interest (162 (170
Increase (decrease) in Net OPEB Obligation $ 151,918 $ 145,360
Net OPEB Obligation beginning of year $ 0 $ 151,918
Net OPEB Obligation end of year $ 151,918 $ 297
Schedule of Employer Contributions
Fiscat Year Annual Emplo Percenta Net OPEBA
Ended or •� •. •. tio
December 31, 2008 $ 314 $ 162 52% $ 151,918
December 31, 2009 (2) 316,086 170,726 54% 297
Required Supplementary Information
Schedule of Funding Progress
January 1, 2008 $ 0 $ 3 $ 3 0% $ 8 46%
January 1, 2009 (2) 0 4 4 0% 9 46%
Employer contributions (Pay -As- You -Go costs) will be determined at the end of the year and will equal the retiree
costs less contributions paid by retirees.
(2) The 2009 liabilities and annual costs are based on the same population as the 2008 liabilities and annual costs.
7 S Toget we're better.
F OUR I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
GOVERNMENTAL ACCOUNTING STANDARDS NO., 45 REQUIREMENTS
Discount Rate A' Funding
The information below is required for Note Disclosures and Required Supplementary Information for
employer reporting. This information is based on an 8.5% discount rate, ARC funding, Projected Unit
Credit actuarial cost method, 30 -year amortization of the UAAL increasing at 5.0% per year (the payroll
growth rate), and implementation of GASB No. 45 in fiscal year 2008.
Notes to the Financial Statements
Net OPEB Obligation
If: of
Annual Required Contribution $ 262,629 $ 262,629
Interest on Net OPEB Obligation 0 0
Adjustment to Annual Required Contribution (0) (0)
Annual OPEB Cost $ 262,629 $ 262,629
Employer Contributions with interest (262,629) (262,629)
Increase (decrease) in Net OPEB Obligation $ 0 $ 0
Net OPEB Obligation beginning of year $ 0 $ 0
Net OPEB Obligation end of year $ 0 $ 0
Schedule of Employer Contributions
Fis7a['Ye IrwAnnual Employer .• OPEB
OPI F,
EB Cost Contribution Contribute Obli
Ended
December 31, 2008 $ 262,629 $ 262,629 100% $ 0
December 31, 2009 (2) 262,629 262,629 100% 0
Required Supplementary Information
Schedule of Funding Progress
Unfunded
ctuarial ctua rActuari • Actuarial Estimate • UAAL as
Valuation Value of Accrued Accrued nded Covered a % o
Date ; 7 Assets atio Pa Pa
AA& Liabi lit Liabi lit
January 1, 2008 $ 0 $ 2 $ 2 0% $ 8 32%
January 1, 2009 (2) 97 2 2 3% 9 31
Employer contributions equal the Annual Required Contribution.
The 2009 liabilities and annual costs are based on the same population as the 2008 liabilities and annual costs.
8 STANTON Together, we're better.
F OUR I
4
Input Information
F -1
STANTON Together, we're better.
GROUP
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Summar of Plan Participants - Cit of Brookl Center
The following summarizes the counts, average age, average service, average compensation and
health care coverage of active employees as of January 1, 2008.
Active Employees r Coordinated Police Et Fire Total
By Health Insurance Coverage
• Single 57 22 79
• Single + Spouse 7 4 11
• Single + Child 11 6 17
• Family 5 7 12
• Waived coverage 22 6 28
• Total active employees 102 45 147
By Health Insurance Plan
■ Open Access Choice 100% - $30 50 19 69
■ Distinctions 11 10 21
■ $1,500 Deductible H RA 3 4 7
■ $2,500 Deductible HRA 16 6 22
■ $1,100 Deductible HSA 0 0 0
■ Waived coverage 22 6 28
■ Total active employees 102 45 147
Averages
• Age at valuation date 47 39 45
• City service 13 11 13
• Annualized 2008 pay $ 53 $ 69,110 $ 58,531
9 STANTON Together, we're better.
ROUR I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Summar of Plan Participants - Cit of Brookl Center ( Continued ) -..
The following is a scatter of City active employees by age and years of City service as of January 1,
2008.
w - -
0 -19 - - - - - - - 0
20 -24 8 - - - - - - 8
25 -29 4 3 - - - - - 7
30 -34 5 6 4 - - - - 15
35 -39 4 7 11 2 - - - 24
40 -44 6 5 2 6 2 - - 21
45 -49 1 2 5 4 3 4 - 19
50-54 6 7 1 1 3 4 1 23
55 -59 3 1 4 3 1 3 2 17
60 -64 2 1 1 2 1 1 5 13
65+ - - - - - - - 0
Total 39 32 28 18 10 12 8 147
10 STANTON
Together, we're better,
GROUP
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Summar of Plan Participants - Cit of Brookl Center ( Continued )
The following summarizes the counts and health care coverage of City inactive participants with
health insurance as of January 1, 2008.
Inactiv Participants Coordinated Police Et Fire
By Health Insurance Coverage
• Single 5 10 15
• Single + Spouse 0 2 2
• Single + Child 0 0 0
• Family 0 1 1
• Total inactives 5 13 18
By Health Insurance Plan
■ Open Access Choice 100% - $30 5 13 18
■ Distinctions 0 0 0
■ $1,500 Deductible H RA 0 0 0
■ $2,500 Deductible H RA 0 0 0
■ $1,100 Deductible HSA 0 0 0
■ Total inactives 5 13 18
Averages
• Age at valuation date 61 55 57
• Age at retirement or disability 62 50 53
• Age of covered spouses N/A 54 54
11
STANTON Together, we're better.
ROUR I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION '1W ad 19
Summar of .. nts - LOGIS Participating .-
The following information summarizes the active employee data provided by the 36 participating
Members of LOGIS for this Actuarial Valuation. Medical coverage, average age, and average
Member service are as of January 1, 2008. =110w 1 A .I L.F. Ambulance 12 1 3 3 2 21 39 10
City of Apple Valley 94 20 29 37 - 180 44 13
City of Blaine 81 17 19 28 46 191 42 9
City of Brooklyn Center 79 11 17 12 28 147 45 13
City of Corcoran 8 4 - 2 1 15 39 8
City of Crystal 49 1 10 23 15 98 44 11
City of Dayton 10 - 2 5 - 17 46 7
City of Deephaven 11 3 1 3 - 18 41 9
City of Delano 12 1 3 2 - 18 46 9
City of Edina 121 20 19 52 58 270 45 14
City of Excelsior 3 4 1 1 - 9 49 11
City of Farmington 48 4 16 11 11 90 42 8
City of Golden Valley 67 11 8 23 20 129 43 12
City of Medina 3 5 2 11 - 21 40 7
City of Minnetonka 137 21 21 30 22 231 44 11
City of Minnetonka Beach - - - 3 1 4 57 8
City of Minnetrista 21 1 5 5 1 33 38 6
City of Mound 14 10 13 12 - 49 45 10
City of Orono 30 2 3 8 6 49 43 10
City of Richfield 116 21 39 42 16 234 46 14
City of Robbinsdale 58 5 2 7 - 72 45 11
City of Rockford 11 - - - - 11 46 9
City of Rogers 13 3 15 12 1 44 40 5
City of Spring Park 2 - - 1 - 3 48 3
City of St. Anthony 25 5 11 11 3 55 42 11
City of Tonka Bay 4 1 - - 1 6 43 7
City of Wayzata 21 6 3 13 - 43 44 13
Hassan Township 1 - - 1 - 2 42 3
LOG I S Association 20 2 8 9 11 50 43 7
Metro Mosquito Control District 31 8 5 5 4 53 45 16
North Metro Mayors Association 1 - - - - 1 48 12
Northwest Cable Commission 22 1 2 10 1 36 40 10
NW Hennepin Human Services Cncl. 8 1 1 - 2 12 44 3
South Lake Minnetonka Police Dept. 4 1 4 8 - 17 45 13
Three Rivers Park District 195 32 22 75 5 329 44 10
West Metro Fire - Rescue District - 1 1 2 1 5 44 6
Total / Averages 1,332 223 285 467 256 2563 44 11
12 STANTON Together, we're better.
ROUR I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Summar of Ptan Participants - LOGIS Participatin Members (Continued
The following is a scatter of active employees for the 36 participating Members of LOGIS by age and
years of Member service as of January 1, 2008.
A, . - ' •
0 -19 - - - - - - - 0
20 -24 95 3 - - - - - 98
25 -29 183 41 2 - - - - 226
30 -34 156 110 23 - - - - 289
35 -39 105 110 99 17 - - - 331
40 -44 96 70 65 70 30 - - 331
45 -49 96 87 74 94 92 25 2 470
50-54 64 86 43 47 62 60 14 376
55 -59 43 55 28 34 42 46 46 294
60 -64 10 23 11 17 18 18 26 123
65+ 4 5 3 4 3 3 3 25
Total 852 590 348 283 247 152 91 2
13 STANTON Together, we're better.
ROUR I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Summar of Ptan Participants - LOGIS Participatin Members (Continued
The following information summarizes the inactive (retiree, disabled and beneficiary) participants
under age 65 provided by the 36 participating Members of LOGIS for this Actuarial Valuation.
Medical coverage and average ages of inactive participants and covered spouses are as of January
1, 2008.
A.L.F. Ambulance - - - - - - -
City of Apple Valley 12 4 1 - 17 59 57
City of Blaine 9 5 - 2 16 59 58
City of Brooklyn Center 15 2 - 1 18 57 56
City of Corcoran 1 - - - 1 53 -
City of Crystal 9 5 1 - 15 60 59
City of Dayton - - - - - - -
City of Deephaven 1 1 - 1 3 57 58
City of Delano - - - - - - -
City of Edina 14 7 - 3 24 59 58
City of Excelsior - - - - - - -
City of Farmington 1 1 - - 2 58 57
City of Golden Valley 5 5 - - 10 59 57
City of Medina 2 1 - - 3 59 49
City of Minnetonka 15 5 - - 20 58 57
City of Minnetonka Beach - - - - - - -
City of Minnetrista - - - - - - -
City of Mound 4 1 - - 5 61 61
City of Orono - 2 - 3 5 58 55
City of Richfield 7 2 1 2 12 58 53
City of Robbinsdale 10 3 - - 13 55 58
City of Rockford - - - - - - -
City of Rogers - - - 1 1 33 27
City of Spring Park - - - - - - -
City of St. Anthony 5 1 - - 6 61 63
City of Tonka Bay 1 1 - - 2 64 65
City of Wayzata 1 - - 1 2 51 52
Hassan Township - - - - - - -
LOGIS Association - - - - - - -
Metro Mosquito Control District 2 2 - - 4 62 58
North Metro Mayors Association - - - - - - -
Northwest Cable Commission - - - - - - -
NW Hennepin Human Services Cncl. - - - - - - -
South Lake Minnetonka Police Dept. 2 - - 1 3 55 55
Three Rivers Park District 12 1 - - 13 61 58
West Metro Fire - Rescue District - - - - - - -
Total / Averages 133 50 3 15 201 59 57
14 STANTON Together, we're better.
ROUR I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Summar of Plan Provisions - Re b State Statutes
The following provisions apply to all Members of LOGIS. These provisions are the minimum allowed
under Minnesota Statutes 471.61 and 299A.465 for local government entities and Members of LOGIS.
Members of LOGIS may have additional provisions beyond those required by Minnesota Statute. If a
Member has additional provisions that provide greater benefits and has requested that Stanton
Group value those benefits, a summary of the additional provisions is included at the end of this
section (page 17) for that Member. If a Member has no additional provisions providing benefits
beyond those required by Minnesota Statute, this fact can be found at the end of this section (page
17) for that Member.
If a Member has additional provisions providing greater benefits and has not requested that Stanton
Group value those additional benefits, a statement of this fact can be found at the end of this
section (page 17) for that Member.
Eligibility Requirements At retirement, employees of Members of LOGIS receiving a disability
benefit or annuity, or eligible to receive an annuity, from a
Minnesota public pension plan (other than a volunteer firefighter
plan) may continue to participate in the LOGIS- sponsored group
health insurance plan that the employee was a participant of
immediately prior to retirement.
Employees may obtain spouse coverage at retirement only if the
employee was receiving spouse coverage immediately prior to
retirement.
Length of Coverage Retirees and spouses are eligible to remain in the LOGIS-sponsored
group health insurance plan until they attain age 65, provided the
applicable premiums are paid. Retirees or spouses that elect not to
continue health coverage, at any time, are not eligible to re- enroll in
a LOGIS- sponsored group health insurance plan.
Retirees that initially obtained spouse coverage may drop spouse
coverage and maintain coverage for themselves; retirees may not
drop coverage for themselves and maintain spouse coverage.
Upon attaining age 65, retirees have the option to continue coverage
in a Medicare Supplemental Plan.
15 STANTON Together, we're better.
ROUR I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Summar of Plan Provisions - Re b State Statutes ( Continued)
Pre -65 Contributions Retirees, other than Officers or Firefighters disabled in the line of
duty, are required to pay the entire premium (group blended) for the
LOGIS- sponsored group health insurance plan of which they are a
participant until age 65, unless otherwise provided for in a collective
bargaining agreement or personnel policy.
The 2008 monthly premiums for the LOGIS- sponsored group health
insurance plans are:
EE EE +S EE +C F
• High Option $497.23 $1,057.86 $1,002.29 $1,308.91
• Distinctions 463.24 988.09 933.50 1
• $1500 H RA 402.08 857.49 810.11 1
• $2500 HRA 352.03 750.60 709.14 926.03
• $1100 HSA 355.07 757.10 715.27 934.04
For Officers or Firefighters disabled in the line of duty, Minnesota
Statute 299A.465 requires the Officer's or Firefighter's employer to
continue payment of the employer's contribution toward health
coverage for the Officer or Firefighter and their spouse, if the spouse
was covered at the time of the disability, until age 65.
The maximum monthly amount that the City contributes toward the
health care coverage of an Officer or Firefighter disabled in the line
of duty is $751.00.
Post -65 Contributions Retirees who are eligible for Medicare are allowed to continue
coverage in one of the Medicare Supplemental Plans below and are
required to contribute the entire premium. The 2008 monthly
premiums for the Medicare Supplemental Plans available to employees
of Members of LOGIS are:
UCare HealthPartners
Minnesota Freedom Plan
• Retiree $219.00 $ 235.40
• Retiree + Spouse 438.00 470.80
Contribution Members of LOGIS, required to pay a contribution for an Officer or
Reimbursement Firefighter disabled in the line of duty, may annually apply for
reimbursement of the contribution to the Commissioner of Public
Safety.
16 STANTON Together, we're better.
POUF' I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Excess Summar of Plan Provisions - In of - Statutes
The following provisions apply to the City. These provisions are in addition to the provisions under
Minnesota Statutes 471.61 and 299A.465 for local government entities.
Background The City will contribute a portion of the LOGIS- sponsored group
health insurance plan premium of which the retiree is a
participant based on the retiree's age and service at
retirement.
Eligibility Requirements Employees who 1) retired on or before December 31, 2007 with
25 years of City service, or 2) retire with full unreduced PERA
pension with continuous full -time uninterrupted City service
and who were hired on or before January 1, 1992.
Cost Sharing The City will pay 100% of the single person premium (group
blended) until age 65.
Assumptions The single person premium (group blended) premium is
assumed to increase in future years based on the health care
trend rates shown on page 29.
100% of future retirees eligible for provisions in excess of State
Statutes are assumed to elect health care coverage at
retirement.
17 STANTON I Together, we're letter,
POLYP
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Summar of Plan Provisions Health Plan Benefits
'/ / / • - - -• 11 1-• i - 11 1-• i ' 11 1'• i
■ 11' 1 ■. ■
In- Network Benefits when care is provided by a network provider
Lifetime Maximum Unlimited Unlimited Unlimited Unlimited Unlimited
Deductible
Single None None $1, 500 per person $2,500 per person $1,100 per individual
(in- network only) (in- network only) contract (in- network
only)
Out -of- Pocket
Maximum
Single $1,200 per person $2,500 per person $2,250 per person $4,000 per person $2,200 per individual
(in- network only) (in- network only) (in- network only) (in- network only) contract (in- network
only)
Family $5,000 per family $5,000 per family $4,500 per family $8,000 per family $4,400 per family
(in- network only) (in- network only) (in- network only) (in- network only) contract year
(in- network only)
Employer HRA
Contribution
Preventive Care
Routine physical 100% 100% 100% Deductible does 100% Deductible does 100% Deductible does
and eye not apply not apply not apply
examinations
Prenatal Et 100% 100% 100% Deductible does 100% Deductible does 100% Deductible does
postnatal care, not apply not apply not apply
well -child care
STANTON' Together, we're better,
18 GIRGURi
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Summar of Plan Provisions - Health Plan Benefits ( Continued )
'/ / / • - - - -• 11 1-• i - 11 1-• i - 11 1-• i
■ 11' 1 ■. ■
In- Network Benefits when care is provided by a network provider
Preventive Care
Immunizations 100% 100% 100% deductible does 100% deductible does 100% deductible does
not apply not apply not apply
When you receive covered services, HealthPartners PAYS:
Office Visits
Illness or Injury 100% after $30 copay 100% after $25 copay 100% after deductible 100% after deductible 80% after deductible
for Benefit Level 1
100% after $30 copay
for Benefit Level 2
100% after $50 copay
for Benefit Level 3
Allergy injections 100% coverage 100% coverage 100% deductible does 100% deductible does 80% after deductible
not apply not apply
Physical, 100% after $30 copay 100% after $25 copay 100% after deductible 100% after deductible 80% after deductible
Occupational Et for Benefit Level 1
Speech Therapy 100% after $30 copay
for Benefit Level 2
100% after $50 copay
for Benefit Level 3
Mental Et Chemical 100% after $30 copay 100% after $25 copay 100% after deductible 100% after deductible 80% after deductible
Health Care
Chiropractic Care 100% after $30 copay 100% after $35 copay 100% after deductible 100% after deductible 80% after deductible
STANTON' Together, we're better,
19 GROUP
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Summar of Plan Provisions - Health Plan Benefits ( Continued )
■ 1 1 e 1 ■ ■ ■ . ■ ■ ■ ■
When you receive covered services, HealthPartners PAYS:
Inpatient Hospital
Care
Illness or injury 100% 100% coverage for 100% after deductible 100% after deductible 80% after deductible
Benefit Level 1
Mental health care 90% coverage for
Benefit Level 2
Chemical health 80% coverage for
care Benefit Level 3
Outpatient Care
Scheduled 100% after $30 copay 100% coverage for 100% after deductible 100% after deductible 80% after deductible
outpatient Benefit Level 1
procedures 90% coverage for
Benefit Level 2
80% coverage for
Benefit Level 3
Outpatient 100% coverage 100% coverage 100% after deductible 100% after deductible 80% after deductible
Magnetic
Resonance Imaging
(MRI) and
Computing
Tomography (CT)
STANTON Together, we're better,
20 GROUP i
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Summar of Plan Provisions - Health Plan Benefits ( Continued )
■ 1 1 e 1 ■ ■ ■ . ■ ■ ■ ■
When you receive covered services, HealthPartners PAYS:
Urgent or
Emergency Care
Urgent care center 100% after $30 copay 100% after $35 copay 100% after deductible 100% after deductible 80% after deductible
Hospital 100% after $75 copay 100% after $75 copay 100% after deductible 100% after deductible 80% after deductible
emergency room
Emergency 80% 80% 100% after deductible 100% after deductible 80% after deductible
ambulance
Prescription
Medications Retail Pharmacy - Retail Pharmacy - Retail Pharmacy - Retail Pharmacy - 80% coverage after
Up to a 31 -day 80% coverage with 80% coverage with 80% coverage with 80% coverage with deductible for
supply; or 1 cycle of the member the member the member the member Formulary Drugs.
oral contraceptives; responsible for responsible for responsible for responsible for
and up to a 93 -day minimum payment of minimum payment of minimum payment of minimum payment of 60% coverage after
supply for mail $10 and maximum of $10 and maximum of $10 and maximum of $10 and maximum of deductible for Non -
order. Tobacco $25 per prescription. $25 per prescription. $25 per prescription. $25 per prescription. Formulary Drugs.
cessation products
are limited to HealthPartners Mail HealthPartners Mail HealthPartners Mail HealthPartners Mail HealthPartners Mail
coverage in- network Order Pharmacy - 80% Order Pharmacy - 80% Order Pharmacy - 80% Order Pharmacy - 80% Order Pharmacy - 80%
and a 180 -day supply coverage with the coverage with the coverage with the coverage with the coverage after
per year. member responsible member responsible member responsible member responsible deductible.
for minimum for minimum for minimum for minimum
payment of $20 and payment of $20 and payment of $20 and payment of $20 and
maximum of $50 per maximum of $50 per maximum of $50 per maximum of $50 per
prescription. prescription. prescription. prescription.
STANTON' Together, we're better,
21 GROUP
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Summar of Plan Provisions - Health Plan Benefits ( Continued )
6T-4Ak1FJ Now 1 1 111 WF Mamilm
When you receive covered services, HealthPartners PAYS:
Specialty
Prescription Drug
Program
Prescription 80% coverage up to a 80% coverage up to a 80% coverage up to a 80% coverage up to a 80% coverage after
medications on the $200 max copay per $200 max copay per $200 max copay per $200 max copay per deductible up to a
specialty drug prescription per prescription per prescription per prescription per $200 max copay per
formulary month. month. month. month. prescription per
month.
STANTON Together, we're better.
22 GROUP r
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Actuariat Assumptions and Methods
Valuation Date January 1, 2008
GASB 45 Implementation Year January 1, 2008 - December 31, 2008
Discount Rates 4.5% (Pay -As- You -Go Funding)
8.5% (ARC Funding)
Payroll Growth Rate 5.0%
Mortality Rates The mortality rates used in the PERA plan of which the
employee, retiree or beneficiary is a participant.
Coordinated Plan
• Healthy Pre - Retirement Male: 1983 Group Annuity Mortality Table for males set back
eight years.
Female: 1983 Group Annuity Mortality Table for females set
back seven years.
• Healthy Post - Retirement Male: 1983 Group Annuity Mortality Table for males set back
one year.
Female: 1983 Group Annuity Mortality Table for females set
back one year.
• Disabled 1965 RRB through age 54. Graded rates between 1965 RRB and
the Healthy Post - Retirement Mortality Table for ages 55 to 64.
The Healthy Post - Retirement Mortality Table for ages 65 and
later.
Police Et Fire Fund
• Healthy Pre - Retirement Male: 1983 Group Annuity Mortality Table for males set back
six years.
Female: 1983 Group Annuity Mortality Table for females set
back six years.
• Healthy Post - Retirement Male: 1983 Group Annuity Mortality Table for males set back
one year.
Female: 1983 Group Annuity Mortality Table for females set
back one year.
• Disabled 1965 RRB through age 40. Graded rates between 1965 RRB and
the Healthy Post - Retirement Mortality Table for ages 41 to 59.
The Healthy Post - Retirement Mortality Table for ages 60 and
later.
23 STANTON Together, we're better.
POUF' I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Actuarial Assumptions and Methods ( Continued )
Withdrawal Rates If individual Member withdrawal experience was considered
credible, the withdrawal rates are based on individual experience.
If not, withdrawal rates were based on all LOGIS Members listed on
page 12. The withdrawal rates for the City are based on the select
and ultimate rates below multiplied by the following factor(s):
Participant Factor
Coordinated Plan 1.00
Police Et Fire Fund 1.50
Coordinated Plan Select and ultimate rates. Ultimate rates after the third year are
shown in the table below. Select rates are as follows:
First Year: 40.00%
Second Year: 15.00%
Third Year: 10.00%
Police Et Fire Fund Select and ultimate rates. Ultimate rates after the third year are
shown in the table below. Select rates are as follows:
First Year: 3.50%
Second Year: 3.50%
Third Year: 3.50%
Summary of Ultimate Withdrawal Rates
- Coordinated Plan- - Police Et Fire Fund -
AA Male Female All Employ
20 8.40% 8.40% 6.01%
25 6.90 6.90 3.24
30 5.40 5.40 1.90
35 3.90 4.20 1.46
40 3.00 3.50 1.26
45 2.50 3.00 0.91
50 2.00 2.50 0.50
55 0.00 0.00 0.11
60 0.00 0.00 0.00
65 0.00 0.00 0.00
70 0.00 0.00 0.00
24 STANTON Together, we're better.
ROUR I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Actuarial Assumptions and Methods ( Continued )
Retirement Rates The retirement rates used in the PERA plan of which the
employee is a participant.
Coordinated Plan The `Rule of 90 Eligible' retirement rates apply to employees
hired prior to July 1, 1989 that have attained the Rule of 90 (age
plus service totals 90). The `Other' retirement rates apply to
employees hired prior to July 1, 1989 that have not attained the
Rule of 90, and employees hired on or after July 1, 1989.
Police Et Fire Fund Rates as shown in the table below.
Summary of Retirement Rates
- Coordinated Plan- - Police Et Fire Fund -
Ru le of 90 All
Awe Eli ible Other Employ
50 0.00% 0.00% 10.00%
51 0.00 0.00 10.00
52 0.00 0.00 10.00
53 0.00 0.00 10.00
54 0.00 0.00 10.00
55 40.00 7.00 30.00
56 40.00 7.00 20.00
57 40.00 7.00 20.00
58 40.00 7.00 20.00
59 40.00 9.00 20.00
60 40.00 9.00 25.00
61 40.00 20.00 25.00
62 40.00 20.00 35.00
63 40.00 20.00 35.00
64 40.00 20.00 35.00
65 40.00 40.00 50.00
66 25.00 25.00 50.00
67 25.00 25.00 50.00
68 25.00 25.00 50.00
69 25.00 25.00 50.00
70 25.00 25.00 100.00
71 100.00 100.00 100.00
25 STANTON Together, we're better.
POUF' I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION
Actuarial Assumptions and Methods ( Continued )
Disability Rates For Coordinated Plan participants no rates of disability were
assumed.
For Police Et Fire Fund participants, no rates of disability related to
disablement not in the line of duty were assumed.
For Police Et Fire Fund participants, sample rates of disability
related to disablement in the line of duty are shown below:
Line of Duty
Awe Disability Rates
20 0.10%
25 0.12
30 0.14
35 0.14
40 0.20
45 0.40
50 0.81
55 1.54
60 0.00
65 0.00
70 0.00
Spouse Age Differential The spouse age differential assumption is based on all LOGIS
Members listed on page 12.
Coordinated Plan Husbands are assumed to be two years older than wives.
Police Et Fire Fund Husbands are assumed to be two years older than wives.
26 STANTON Together, we're better.
POUF' I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION '1W A
Actuarial Assumptions and Methods ( Continued )
Health Coverage Election The health coverage election is the percentage of future retirees
who are assumed to elect health coverage at retirement.
If individual Member experience was considered credible, the health
coverage election is based on individual Member experience. If not,
the health coverage election is based on the experience of all LOGIS
Members listed on page 12. The health coverage election for the
City is 55 %.
Spouse Coverage Election The spouse coverage election is the percentage of future retirees
with health coverage who are assumed to elect spouse coverage at
retirement. Spouse coverage election is based on the experience of
all LOGIS Members listed on page 12.
Coordinated Plan The health coverage election for Coordinated Plan Participants is
40 %.
Police Et Fire Fund The health coverage election for Police Et Fire Fund Participants is
60 %.
Health Plan Election 80% of future retirees are assumed to elect coverage in the Open
Access Choice High Plan.
20% of future retirees are assumed to elect coverage in the
Distinctions Plan.
Current retirees in either the Open Access Choice High Plan or the
Distinctions Plan are valued in their current plan.
Current retirees not in either the Open Access Choice High Plan or
the Distinctions Plan are valued 80% in the Open Access Choice High
Plan and 20% in the Distinctions Plan.
Post -65 Medical Coverage Post -65 medical coverage is provided through Medicare
Supplemental Plans. The premiums charged for the Medicare
Supplemental Plans are assumed to equal the expected cost of
coverage in the Medicare Supplemental Plans. Therefore, post -65
medical coverage was not valued, unless the Member entity pays a
portion of the Medicare Supplemental Plan premiums and requested
that Stanton Group value this benefit.
Contribution Reimbursements of contributions related to Officers and Firefighters
Reimbursement disabled in the line of duty from the Commissioner of Public Safety
to Members of LOGIS are not to be considered in determining
liabilities under GASB No. 45.
27 STANTON Together, we're better.
ROUR I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION '1W A
Actuarial Assumptions and Methods ( Continued )
Per Capita Claims and Per capita medical and prescription drug claims and administration
Administrative Costs costs were developed based on the following:
• Claims experience, fees and administration costs for actives
and retirees (including dependents) participating in the Medica
Choice Select 100% -30 plan from January 1, 2005 through
December 31, 2007.
• Claims experience, fees and administration costs for actives
and retirees (including dependents) participating in the Medica
Elect and Medica Essential 100% -30 plan from January 1, 2005
through December 31, 2007.
• Claims experience was adjusted for health care trend, plan
values, and age -sex differentials between active employees
and retirees.
The following table provides 2008 per capita claims and
administration costs at sample ages:
2008 Per Capita Claims and Administration Costs
Open Access Choice Distinctions
Awe
Hip,h Plan Plan
20 $2 $1,881
25 2 2,180
30 3 2
35 3 2
40 4 3, 571
45 5 4, 314
50 6 5
55 8 6
60 10,118 7
64 11 8
28 STANTON Together, we're better.
FAO U P I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
INPUT INFORMATION '1W A
Actuarial Assumptions and Methods ( Continued ) IR
Health Care Trend Rates Trend rates are used to project current combined medical and
prescription drug claims and administration costs and retiree
premiums into the future. If health care inflation were to continue
at its current rate, eventually 100% of the Gross National Product
(GNP) would be allocated for health care services. Since this is
unrealistic, health care trend rates are assumed to decrease in
future years. The following table provides the health care trend
rates for future years.
2008 Health Care Trend Rates
Fiscal Year Medical and Prescription Drug
Bea,innina, Health Care Trend Rates
2008 10.00%
2009 9.50%
2010 9.00%
2011 8.50%
2012 8.00%
2013 7.50%
2014 7.00%
2015 6.50%
2016 6.00%
2017 5.50%
2018+ 5.00%
Actuarial Cost Methods Projected Unit Credit. The Projected Unit Credit Actuarial Cost
Method develops the annual cost of the Plan in two parts: that
attributable to benefits accruing in the current year, known as the
normal cost, and that due to service earned prior to the current
year, known as the amortization of the unfunded actuarial accrued
liability. The normal cost and the actuarial accrued liability are
calculated individually for each active employee. The normal cost
is the present value of the portion of projected benefits that is
attributable to service accrued in the current year. The unfunded
actuarial liability reflects the difference between the portion of
projected benefits attributable to service credited prior to the
valuation date and assets already accumulated. The unfunded
actuarial accrued liability is amortized as of the valuation date as a
level percentage of payroll over a period of 30 years.
Actuarial Value of Assets It was assumed that no Member of LOGIS had assets in a trust or
equivalent arrangement allowed to be used for GASB No. 45
purposes as of January 1, 2008.
29 STANTON Together, we're better.
ROUR I
i.
Governmental Standards
No. 43 F± No. 45 Terminolo
STANTON To we're better.
n
GROUP -1
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
GOVERNMENTAL ACCOUNTING STANDARDS NO., 43 Et NO., 45 TERMINOLOGY
Actuarial Cost Methods
The determination of the Annual Required Contribution (ARC) is based upon the selection of an
actuarial cost method. The purpose of an actuarial cost method is to provide a systematic
approach to allocating benefit costs to an employee's active working lifetime. Cost methods will
result in different contribution patterns, but each method will result in the same level of funding at
the end of an employee's working lifetime. Any of six different actuarial cost methods are
considered acceptable. The six different cost methods are called Entry Age Normal, Frozen Entry
Age, Attained Age, Frozen Attained Age, Projected Unit Credit, and Aggregate.
An actuarial cost method has three functions. First, it will determine what liabilities are
attributable to past service and what liabilities are attributable to future service. All liabilities for
a retiree will be attributable to past service regardless of the cost method elected. However,
different cost methods will allocate different liability amounts to past and future service for active
employees.
The second function of an actuarial cost method regards how actuarial gains or losses are
recognized. When actual results differ from expected results, an actuarial gain or loss will occur.
Under an "immediate gain" method (Entry Age Normal, Attained Age, and Projected Unit Credit)
the gain or loss will become part of the past service liability. Under a "spread gain" method
(Frozen Entry Age, Frozen Attained Age, and Aggregate), the gain or loss will become part of the
future service liability.
The third function of an actuarial cost method is to spread the past service and future service
liabilities over periods of time to determine the ARC. Past service liabilities are amortized over a
period of time not to exceed 30 years. Future service liabilities are spread over the expected
working lifetime of active participants.
Significant differences in the allocation between past and future service liabilities and between
amortization periods and expected working lifetimes can lead to significantly different ARC
calculations. For example, a plan of younger employees using a "spread gain" method will allocate
costs over a longer period of time than would be seen for a group of older employees.
The chart on page 31 attempts to demonstrate the actuarial valuation process and the role of
actuarial cost methods. The actuarial process can be summarized as follows:
1. Participant data, plan provisions, and actuarial assumptions are combined to determine the
Actuarial Present Value of Benefits (PVB).
2. An actuarial cost method is applied to allocate the PVB to past service and future service
liabilities. The past service liability is called the Actuarial Accrued Liability (AAL). The
future service liability is often called the Present Value of Future Normal Costs.
3. Plan assets, if any, are applied first to the AAL. If the AAL exceeds plan assets, the excess is
called the Unfunded Actuarial Accrued Liability (UAAL).
30 STANTON Together, we're better.
ROUR I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
GOVERNMENTAL ACCOUNTING STANDARDS NO., 43 Et NO., 45 TERMINOLOGY mod d
Actuariat Cost Methods (Continued
4. The UAAL is amortized over a period of time to create the past service component of the
annual cost.
5. The Present Value of Future Normal Costs is spread over the active employees' expected
future working lifetimes.
This process doesn't fully describe every component of the ARC but rather is intended to generalize
the process.
See chart on page 32.
As discussed, each funding method creates different funding patterns, but each method will
ultimately fund the same amount. The following example shows how different actuarial cost
methods could result in different contribution patterns. When applicable, all methods in the
example are calculated as a level percent of pay, as opposed to a level dollar amount. In addition,
any initial unfunded liability is amortized as a level percent of pay over 30 years. Please note that
amortization periods up to 30 years are allowed under GASB No. 43 and No. 45. The examples also
assume that actuarial assumptions (return on assets, participant mortality, retirement withdrawals,
etc.) are met every year.
Contributions Cost by Cost Method
Entry Age
—&—Projected Unit Credit
Aggregate
Frozen Entry Age
Frozen Attained Age
Q
2X01 2X03 2X05 2X07 2X09 2X11 2X13 2X15 2X17 2X19 2X21
Year
31 STANTON Together, we're better.
ROUR I
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
GOVERNMENTAL ACCOUNTING STANDARDS NO. 43 Et NO. 45 TERMINOLOGY Ad d
Actuarial C ost Methods • -•
The PVB is the value of all
future benefits payable to all
current plan participants. The Participant Plan Actuarial
PVB is dependent on the Data Provisions Assumptions
actuarial assumptions, I F it I
particularly the discount rate
assumption used to discount
future values to the valuation L-M
date. The discount rate is A ctuari a l _ _ _ o B _ _ equal to the assumed rate of
return on the plan's assets.
The PVB is allocated to
participant's past service and
future service. For retirees and
terminated participants, the Accru , P Va _ ,� F
entire liability is a past service Future
liability. The past service : i r
liability is the AAL. The AAL
will depend on the actuarial
assumptions and cost method
selected.
A A The PVFNC
The AVA may either be marked Value represents the
to market or reflect asset
y value of future
smoothing techniques. benefits for
active ............................... The UAAL is dependent on the e veer.
actuarial assumptions and cost mpl
methods used to determine
liability and asset values Normal
Annual Cost = + Cost
STANTON Together, we're getter,
3 2 GROUP
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
GOVERNMENTAL • • 43 Et NO., 45 TERMINOLOGY I
Actuarial Cost Methods . -.
Projected Unit Credit
A method under which the benefits (projected or unprojected) of each individual included in an
Actuarial Valuation are allocated by a consistent formula to valuation years. The Actuarial Present
Value of benefits allocated to a valuation year is called the Normal Cost. The Actuarial Present
Value of benefits allocated to all periods prior to a valuation year is called the Actuarial Accrued
Liability.
Note 1: The description of this method should state the procedures used, including:
(a) how benefits are allocated to specific time periods;
(b) the procedures used to project benefits, if applicable; and
(c) a description of any other method used to value a portion of the OPEB plan's benefits.
Note 2: Under this method, the Actuarial Gains (Losses), as they occur, generally reduce (increase)
the Unfunded Actuarial Accrued Liability.
Entry Age Normal
A method under which the Actuarial Present Value of the Projected Benefits of each individual
included in an Actuarial Valuation is allocated on a level basis over the earnings or service of the
individual between entry age and assumed exit age(s). The portion of this Actuarial Present Value
allocated to a valuation year is called the Normal Cost. The portion of this Actuarial Present Value
not provided for at a valuation date by the Actuarial Present Value of the future Normal Costs is
called the Actuarial Accrued Liability.
Note 1: The description of this method should state the procedures used including:
(a) whether the allocation is based on earnings or service
(b) where aggregation is used in the calculation process;
(c) how entry age is established;
(d) what procedures are used when different benefit formulas apply to various periods of
service; and
(e) a description of any other method used to value a portion of the OPEB plan's benefits.
Note 2: Under this method, the Actuarial Gains (Losses), as they occur, reduce (increase) the
Unfunded Actuarial Accrued Liability.
33 STANTON I Together, we're letter,
GROUP
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
GOVERNMENTAL ACCOUNTING STANDARDS NO., 43 Et NO., 45 TERMINOLOGY d
Actuarial Cost Methods . -.
Attained Abe
A method under which the excess of the Actuarial Present Value of Projected Benefits over the
Actuarial Accrued Liability in respect of each individual included in an Actuarial Valuation is
allocated on a level basis over the earnings or service of the individual between the valuation date
and assumed exit. The portion of this Actuarial Present Value which is allocated to a valuation year
is called the Normal Cost. The Actuarial Accrued Liability is determined using the Unit Credit
Actuarial Cost Method.
Note 1: The description of this method should state the procedures used, including:
(a) whether the allocation is based on earnings or service;
(b) where aggregation is used in the calculation process; and
(c) a description of any other method used to value a portion of the OPEB plan's benefits.
Note 2: Under this method, the Actuarial Gains (Losses), as they occur, reduce (increase) the
Unfunded Actuarial Accrued Liability.
Note 3: The differences which regularly arise between the Normal Cost under this method and the
Normal Cost under the Unit Credit Actuarial Cost Method will affect the determination of
future Actuarial Gains (Losses).
ARP
,regate
A method under which the excess of the Actuarial Present Value of Projected Benefits of the group
included in an Actuarial Valuation over the Actuarial Value of Assets is allocated on a level basis
over the earnings or service of the group between the valuation date and assumed exit. This
allocation is performed for the group as a whole, not as a sum of individual allocations. That
portion of the Actuarial Accrued Liability is equal to the Actuarial Value of Assets.
Note 1: The description of this method should state the procedures used, including:
(a) whether the allocation is based on earnings or service;
(b) how aggregation is used in the calculation process; and
(c) a description of any other method used to value a portion of the OPEB plan's benefits.
Note 2: Under this method, the Actuarial Gains (Losses), as they occur, reduce (increase) the future
Normal Cost.
34 STANTON I Together, we're letter,
GROUP
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
GOVERNMENTAL ACCOUNTING STANDARDS NO., 43 Et NO., 45 TERMINOLOGY
Actuarial Cost Methods . -.
Frozen Entry Age
A method under which the excess of the Actuarial Present Value of Projected Benefits of the group
included in an Actuarial Valuation, over the sum of the Actuarial Value of Assets plus the Unfunded
Frozen Actuarial Accrued Liability, is allocated on a level basis over the earnings or service of the
group between the valuation date and assumed exit. This allocation is performed for the group as a
whole, not as a sum of individual allocations. The Frozen Actuarial Accrued Liability is determined
using the Entry Age Actuarial Cost Method. The portion of this Actuarial Present Value allocated to
a valuation year is called the Normal Cost.
Note 1: The description of this method should state the procedures used, including:
(a) whether the allocation is based on earnings or service;
(b) how aggregation is used in the calculation process; and
(c) a description of any other method used to value a portion of the OPEB plan's benefits.
Note 2: Under this method, the Actuarial Gains (Losses), as they occur, reduce (increase) the future
Normal Cost.
Frozen Attained Age
A method under which the excess of the Actuarial Present Value of Projected Benefits of the group
included in an Actuarial Valuation, over the sum of the Actuarial Value of Assets plus the Unfunded
Frozen Actuarial Accrued Liability, is allocated on a level basis over the earnings or service of the
group between the valuation date and assumed exit. This allocation is performed for the group as a
whole, not as a sum of individual allocations. The Unfunded Frozen Actuarial Accrued Liability is
determined using the Unit Credit Actuarial Cost Method. The portion of this Actuarial Present
Value allocated to a valuation year is called the Normal Cost.
Note 1: The description of this method should state the procedures used, including:
(a) whether the allocation is based on earnings or service;
(b) how aggregation is used in the calculation process; and
(c) a description of any other method used to value a portion of the OPEB plan's benefits.
Note 2: Under this method, the Actuarial Gains (Losses), as they occur, reduce (increase) the future
Normal Cost.
35 STANTON I Together, we're letter,
GROUP
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
GOVERNMENTAL ACCOUNTING STANDARDS NO., 43 Et NO., 45 TERMINOLOGY d
Definitions A
Actuarial Accrued Liability (AAL)
As of a particular date, the AAL is the portion of the Actuarial Present Value of Benefits attributed
to an employee's past service.
Actuarial Present Value of Benefits (PVB)
As of a particular date, the PVB is the actuarial present value of all future benefits claims and
administration costs expected to be paid for an employee and their dependents in retirement,
offset by the actuarial present value of all future contributions expected to be paid by the
employee and their dependents during retirement.
Actuarial Value of Assets (AVA)
The value of assets irrevocably dedicated to the plan for providing future benefits to employees
and their dependents.
Agent Multiple- Employer Plan
A group of single- employer plans that share administrative costs and functions.
Annual OPEB Cost
The ARC adjusted for the Net OPEB Obligation, if a Net OPEB Obligation exists. When an employer
has no Net OPEB Obligation, the Annual OPEB Cost is equal to the ARC.
Annual Required Contribution (ARC)
The employer's periodic required contribution to the OPEB plan, which consists of the Normal Cost
for the year and amortization of the Unfunded Actuarial Accrued Liability.
Closed Amortization Period
An amount is amortized over a specific number of years that decreases to zero with the passage of
time. For example, if the amortization period is initially 30 years then 29 years remain after the
first year, 28 after the second year, and so forth.
Cost - Sharing Multiple- Employer Plan
A plan where benefits and administrative costs and functions are shared among all participating
employers.
36 STANTON I Together, we're letter,
GROUP
CITY OF BROOKLYN CENTER
GASB NO. 45 ACTUARIAL VALUATION
GOVERNMENTAL ACCOUNTING STANDARDS NO., 43 Et NO., 45 TERMINOLOGY d I
1- • ns (Continued
Level Dollar Amortization Method
Amortization payments are calculated so that they are a constant amount, when expressed as a
dollar amount, over the amortization period.
Net OPEB Obligation (N00)
The cumulative difference, including interest, between (a) the employer's required contributions in
accordance with the plan's actuarially determined funding requirements and (b) the contributions
made by the employer in relation to the required contributions.
Normal Cost
The portion of the Actuarial Present Value of Benefits expected to be earned during the year, and
allocated to the year, pursuant to the actuarial assumptions and methods used.
Open Amortization Period
An amount is amortized over a specific number of years and begins again or is recalculated at each
actuarial valuation date. The period may increase, decrease, or remain stable.
Percentage of Payroll Amortization Method
Amortization payments are calculated so that they are a constant amount, when expressed as a
percentage of payroll, over the amortization period.
Single- Employer Plan
A plan that provides benefits to the current and former employees, including beneficiaries, of a
single employer only.
Unfunded Actuarial Accrued Liability (UAAL)
The excess of the Actuarial Accrued Liability over the Actuarial Value of Assets.
37 STANTON I Together, we're letter,
POLYP
STANTON I Together, we're better.
GROUP
October 9, 2008
Ms. Clara Hilger
City of Brooklyn Center
6301 Shingle Creek Parkway
Brooklyn Center, MN 55430
Re: 2008 and 2009 GASB No. 45 Annual Required Contribution Allocation
Dear Ms. Hilger:
As you requested, we have calculated the portion of the City's Annual Required Contribution
(ARC) effective for fiscal years 2008 and 2009 attributable to benefits required by Minnesota
State Statutes, and the portion attributable to benefits in excess of those required by
statutes. We calculated the allocation of the ARC based on a Pay -As- You -Go funding basis,
using a 4.5% discount rate. The table below summarizes our results:
Normal Cost $ 146,775 $ 29,689 $176,464
Amortization of UAAL 89 34 124,191
Interest on above amounts to end of year 10 2 13, 529
Annual Required Contribution $247 $ 66,781 $ 314
If you have any questions, contact Phil Souzek at (763) 278 -4176 or me at (763) 278 -4022.
Sincerely,
Christopher L. Grabrian, ASA, MAAA, EA
Actuarial Consultant
cc: Dan Jordet
Phil Souzek
Corporate Headquarters
3405 Annapolis Ln N, Suite 100, Minneapolis, MN 55447
763 278 4000 1 763 278 4007 (fax) I www.stanton- group.com
An Affirmative Action /Equal Opportunity Employer
Stanton Group
Division of Gallagher Benefit Services, Inc.
February 26, 2009
Ms. Clara Hilger
City of Brooklyn Center
6301 Shingle Creek Parkway
Brooklyn Center, MN 55430
Re: 2008 and 2009 GASB No. 45 Annual Required Contribution Allocation
Dear Ms. Hilger:
As you requested we have broken down the City's 2008 and 2009 Annual Required
Contribution (ARC) by Employee Function, and also by the portion attributable to benefits
required by Minnesota State Statutes, and the portion attributable to benefits in excess of
state statutes. We calculated the allocation of the ARC based on a Pay -As- You -Go funding
basis, using a 4.5% discount rate. The attached table summarizes our results, which match
our January 1, 2008 valuation.
If you have any questions, contact Phil Souzek at (763) 278 -4176 or me at (763) 278 -4022.
Sincerely,
Christopher L. Grabrian, ASA, MAAA, EA
Actuarial Consultant
cc: Dan Jordet, City of Brooklyn Center
Phillip A. Souzek, Stanton Group
3405 Annapolis Ln N, Suite 100, Minneapolis, MN 55447
763 278 4000 1 763 278 4007 (fax) I www.stanton- group.com
An Affirmative Action /Equal Opportunity Employer
Business -type 23 1 24 $ 15,047 $ 2,715 $ 17,762
Economic Development 2 1 3 2 600 3
Garage 5 0 5 4 1, 758 6
General Government 21 0 21 19 8 28,129
Parks and Recreation 16 0 16 24,126 15 40, 096
Public Safety 63 13 76 164,111 31,288 195,399
Public Works 17 3 20 16,694 6 22
Total 147 18 165 $ 247,403 w w , $ 314,184
Note: Results above are based on the January 1, 2008 GASB 45 Valuation provided on September 29, 2008.
Totals to $66,781.00
1
(Premiums Paid) Implicit
Age at Retiree Actual Rate
Name Dept 12/31/2008 Costs Contributions Subsidy
CITY PAID
Bentzen, J. PARKS 62 5 2 2
Dirks POLICE 57 9 5 3
Downer 59
spouse POLICE 57 18 12 6
Fryer POLICE 59 9 5 3
Grass POLICE 59 9 5 3
Hennessy POLICE 55 3 2 1
Hoffman CD 62 10 5 4
Kline POLICE 65 953.17 497.23 455.94
Kortan POLICE 58 9 5 3
McComb POLICE 58 9 5 3
Mueller LIQUOR 65 10 5 5
Nelson PW 64 11 5 5
Ptak POLICE 59 9 5 3
Stadt GARAGE 59 8 4 3
Weeks 64
spouse POLICE 62 22 12 9
DISABLED
French POLICE 42 5 5 (870.76)
Rayl POLICE 61 10 5 4
Tombers 41
spouse POLICE 43 10 12 (2
COBRA/STATE STATUTE
Anderson, S STREETS 64 11 5 5
Hennessey POLICE 55 4 3 1
Moen POLICE 53 7 5 1
Ploumen POLICE 50 6 5 1
206, 651.72 135, 540.04 711111.68
ARC Actual Interest on ARC Amort Amort Pension change in NPO
UAAL normal UAAL Amort admin Contr NPO Adjust Period Factor Cost NPO Balance
2008 3 176,464 124 13,529 314 167 NA NA NA NA 314 147,045 147,045
2009 4 176,464 124 13,529 314 6 9 29 16.0219 311,623 311,623 458,668
2010 - 20,640 29,135 28 15.7429 (8 (8 450,173
2011 - 20,258 29,135 27 15.4513 (8 (8 441,296
2012 - 19,858 29,135 26 15.1466 (9 (9 432,019
2013 - 19,441 29,135 25 14.8282 (9 (9 422,325
2014 - 19,005 29,135 24 14.4955 (10,130) (10,130) 412,195
2015 - 18,549 29,135 23 14.1478 (10,586) (10,586) 401,609
2016 - 18,072 29,135 22 13.7844 (11,063) (11,063) 390,546
2017 - 17,575 29,135 21 13.4047 (11,560) (11,560) 378,986
2018 - 17,054 29,135 20 13.0079 (12,081) (12,081) 366,905
2019 - 16,511 29,135 19 12.5933 (12,624) (12,624) 354,281
2020 - 15,943 29,135 18 12.1600 (13,192) (13,192) 341,089
2021 - 15,349 29,135 17 11.7072 (13,786) (13,786) 327,303
2022 - 14 29,135 16 11.2340 (14,406) (14,406) 312,897
2023 - 14,080 29,135 15 10.7395 (15,055) (15,055) 297,842
2024 - 13,403 29,135 14 10.2228 (15,732) (15,732) 282,110
2025 - 12,695 29,135 13 9.6829 (16,440) (16,440) 265,670
2026 - 11,955 29,135 12 9.1186 (17,180) (17,180) 248,490
2027 - 11 29,135 11 8.5289 (17,953) (17,953) 230,537
2028 - 10,374 29,135 10 7.9127 (18,761) (18,761) 211,776
2029 - 9 29,135 9 7.2688 (19,605) (19,605) 192,171
2030 - 8 29,135 8 6.5959 (20,487) (20,487) 171,684
2031 - 7 29,135 7 5.8927 (21,409) (21,409) 150,275
2032 - 6 29,135 6 5.1579 (22,373) (22,373) 127,902
2033 - 5 29,135 5 4.3900 (23,379) (23,379) 104,523
2034 - 4 29,135 4 3.5875 (24,431) (24,431) 80,092
2035 - 3 29,135 3 2.7490 (25,531) (25,531) 54,561
2036 - 2 29,135 2 1.8727 (26,680) (26,680) 27,881
2037 - 1 29,136 1 0.9569 (27,881) (27,881) -