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NOTE 11— OTHER POST -EMPLOYMENT BENEFITS PLAN (CONTINUED) C. Annual OPEB Cost and Net OPEB Obligation The Citv's annual OPEB cost (expense) is calculated based on annual required contributions (ARC) of the City, an amount determined on an actuarially determined basis in accordance with the parameters of GASB Statement Nos. 43 and 45. The ARC represents a level funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The following table shows the components of the Citv's annual OPEB cost for the year, the amount actually contributed to the plan, and the changes in the Citv's net OPEB obligation to the plan: Ainiival required contribution $ 52,071 Interest on net OPEB obligation 20,681 Adjustment to annual required contribution (17,313) Annual OPEB cost (expense) 55,439 Contributions made - Increase in net OPEB obligation 55,439 Net OPEB obligation - beginning of year 459,572 Net OPEB obligation - end of -year $ 515,011 The Citv's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the past three years are as follows: Fiscal Year Annual Plan Sponsor Annual OPEB Net OPEB Ended OPEB Cost Contribution Cost Contributed Obligation December 31, 2014 $ 62,922 $ 5,374 9% $ 404,555 December 31, 2015 $ 65,577 $ 10,560 16% $ 459,572 December 31, 2016 $ 55,439 $ - 0% $ 515,011 D. Funded Status and Funding Progress As of January 1, 2016, the most recent actuarial valuation date, the actuarial accrued liability_ for benefits and the unfunded actuarial accrued liability (UAAL) was $368,949 as the plan is unfunded. The covered payroll (annual payroll of active employees covered by the plan) was $5,019,000, and the ratio of the UAAL to the covered payroll was 7%. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability occurrence of events far 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 ARC's 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 immediately following the notes to basic financial statements presents multi -year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. 88