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Cabarrus County, North Carolina
<br />Notes to the Financial Statements
<br />For the Year Ended June 30, 2012
<br />basis. In the future, employees and retirees may be required to participate in premiums for basic group health and
<br />life insurance plans. The plan was established and may be amended by the Board of Commissioners.
<br />The current Annual Required Contribution rate is 8.85 % of annual covered payroll (5.76% normal cost and 3.09%
<br />accrued liability). The County contributed $1,371,402 or 3.9% of annual covered payroll for the current fiscal year.
<br />The County is self insured for healthcare coverage. The County's required contributions for employees not engaged
<br />in law enforcement and for law enforcement officers represented 2.7% and 1.2% of covered payroll. Contributions
<br />of $50 per month were made by employees and retirees who currently use tobacco products and have not signed a
<br />non use tobacco certification. These contributions were $47,300 for the current year. There were no other
<br />contributions made by employees, except for dependent coverage in the amount of $966,850.
<br />Summary of Significant Accounting Policies. Postemployment expenditures for former employees are made from
<br />the General Fund. This fund is maintained on a modified accrual basis of accounting. No funds are set aside to
<br />pay benefits and administrative costs. These expenditures are paid as they come due.
<br />Annual OPEB Cost and Net Pension Obligation. The County's annual OPEB cost (expense) is calculated based on
<br />the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the
<br />parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis is
<br />projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a
<br />period not to exceed thirty years. The following table shows the components of the County's annual OPEB cost for
<br />the year, the amount actually contributed to the plan, and changes in the County's net OPEB obligation for the
<br />healthcare benefits:
<br />2012
<br />Annual Required Contribution
<br />$ 3,060,420
<br />Interest on Net OPEB Obligation
<br />265,368
<br />Adjustment to annual required contribution
<br />(253,509)
<br />Annual OPEB cost (expense)
<br />3,072,279
<br />Contributions made
<br />(1,371,402)
<br />Increase (decrease) in net OPEB obligation
<br />1,700,877
<br />Net OPEB obligation, beginning of year
<br />6,634,194
<br />Net OPEB obligation, end of year
<br />8.335.071
<br />The County's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB
<br />obligation were as follows:
<br />For Year Ended
<br />June 30
<br />Annual
<br />OPEB Cost
<br />Percentage of Annual
<br />OPEB Cost Contributed
<br />Net OPEB
<br />Obligation
<br />2008
<br />$1,850,169
<br />28%
<br />$1,341,176
<br />2009
<br />$2,156,844
<br />27%
<br />$2,912,737
<br />2010
<br />$2,529,209
<br />27%
<br />$4,765,234
<br />2011
<br />$2,525,090
<br />26%
<br />$6,634,194
<br />2012
<br />$3,072,279
<br />44.6%
<br />$8,335,071
<br />Funded Status and Funding Progress. As of December 31, 2011 the most recent actuarial valuation date, the plan
<br />was not funded. The actuarial accrued liability for benefits and, thus the unfunded actuarial accrued liability (UAAL)
<br />was $27,978,569. The covered payroll (annual payroll of active employees covered by the plan) was $34,588,322
<br />and the ratio of the UAAL to the covered payroll was 80.9 %. Actuarial valuations of an ongoing plan involve
<br />estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into
<br />the future. Examples include assumptions about future employment, mortality and healthcare trends. Amounts
<br />determined regarding the funded status of the plan and the annual required contributions of the employer are
<br />subject to continual revision as actual results are compared with past expectations and new estimates are made
<br />about the future. The schedule of funding progress, presented as required supplementary information following the
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