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Executive Summary <br /> This report has been prepared for the City of Pequot Lakes,for the fiscal year beginning <br /> January 1,2015 and ending December 31,2015,to assist in complying with the reporting and <br /> disclosure requirements under GASB Statements 43 and 45. City of Pequot Lakes is a Tier 3 entity <br /> under GASB 45 and has implemented GASB 45 for the fiscal year beginning January 1,2009 and <br /> ending December 31, 2009. <br /> Funding Policy <br /> OPEB benefits have historically been funded on a pay-as-you-go basis(PAYGO). Under GASB 45, <br /> plan sponsors may set up a trust and pre-fund the benefits. There is no requirement to pre-fund <br /> benefits under GASB 45. However,continuing on a PAYGO basis will create a Net OPEB Obligation <br /> (NOO)on the balance sheet over time(the NOO at the beginning of the GASB 45 implementation <br /> year is$0). Results throughout the report assume continued funding under PAYGO. <br /> Summary of Results <br /> The results below reflect initial implementation in the fiscal year ending December 31,2009. Plan <br /> sponsors that finance on a pay-as-you-go basis(PAYGO) usually pay retiree benefits out of the <br /> general fund. General funds typically are invested in short-term securities. Liabilities have been <br /> valued using an estimated return on the general fund of 4.00%.The ARC assumes the Unfunded <br /> Accrued Liability(UAL)will be amortized on a closed basis. <br /> Summary of Results January 1,2015 <br /> 1. Liabilities <br /> a. Accrued Liability <br /> i. Actives $ 94,546 <br /> ii. Retirees and Beneficiaries 0 <br /> iii. Total 94,546 <br /> b. Normal Cost 14,601 <br /> c. Estimated Benefit Payments 117 <br /> d. Valuation Salary 607,093 <br /> e. Discount Rate 4.00% <br /> 2. Funded Status <br /> a. Accrued Liability $ 94,546 <br /> b. Market Assets 0 <br /> c. Unfunded Accrued Liability(UAL),a.—b. 94,546 <br /> d. UAL as%of Payroll,c./1.d. 15.6% <br /> 3. Estimated Annual Costs for Year Beginning January 1,2015 <br /> a. Pay-as-you-go Cost(PAYGO) $ 117 <br /> b. Annual Required Contribution (ARC) 21,033 <br /> c. Annual OPEB Cost 18,083 <br /> d. PAYGO as%of ARC 0.6% <br /> 4. Estimated Balance Sheet <br /> a. Net OPEB Obligation January 1,2015 $ 148,682 <br /> b. Annual OPEB Cost 18,083 <br /> c. Estimated Employer Contributions under PAYGO 117 <br /> d. Estimated Net OPEB Obligation December 31,2015,a.+b.—c. 166,648 <br /> City of Pequot Lakes <br /> Page 4 <br />