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Indian River County, Florida Notes To Financial Statements Year Ended September 30, 2010 NOTE 17 — OTHER POSTEMPLOYMENT BENEFITS PLAN - Continued D. Funded Status and Funding Progress The contribution made to the IRCOT for the current fiscal year was 107.7% of the annual OPEB cost. Information is available for the two preceding fiscal years. As of the October 1, 2009 actuarial valuation date, the IRCOT was 11.37% funded, the actuarial accrued liability for benefits was $29.1 million, and the actuarial value of assets was $3.7 million, resulting in an unfunded actuarial accrued liability (UAAL) of $28.8 million. The covered payroll (annual payroll of active employees covered by the IRCOT) was $70.6 million, and the ratio of the UAAL to the covered payroll was 40.8%. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress and schedule of employer contributions, presented as required supplementary information following the notes to the financial statements, presents information about whether the actuarial value of the plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. E. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the benefits provided under terms of the substantive plan (the plan as understood by the employer and the plan members) in effect at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan members in the future. Actuarial calculations reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The actuarial methods are: Actuarial cost method Amortization method Amortization period (closed) Asset valuation method The actuarial assumptions are: Investment rate of return Projected annual salaries increase Healthcare cost trend rate (post-retirement benefit) Inflation rate Entry age normal cost method Level percent of payroll projected to grow 4% per year 18 years Market Value 7% (net administrative expenses) 4.5%-9.47% (dependent on years of service and age) 9% Included in the Healthcare cost trend rate 92