Treasury Recommendation Non-Primary Unit 830100 Type of ... · Treasury Recommendation Wexford County Road Commission OPEB Corrective Action Plan (CAP) Non-Primary Unit 830100 . addition

Treasury Recommendation Wexford County Road Commission OPEB Corrective Action Plan (CAP)

Non-Primary Unit 830100

Name of Systems

Type of System

Assets Liabilities Funded Ratio

ADC Revenues ADC/Revenue CAP required?

MERS Pension $9,881,619 $14,040,293 70.4% $395,574 $8,568,846 4.6% No Healthcare OPEB $0 $621,287 0.0% $26,380 0.3% Yes Total $9,881,619 $14,661,580 $421,954 $8,568,846 4.9%

Source: Retirement Report 2017, Audited Financial Statements

Staff Recommendation: Approval of the OPEB corrective action plan submitted by Wexford County Road Commission, which was received by the Municipal Stability Board (the Board) on October 17, 2018. If approved by the Board, Treasury and the Board will continue to monitor them for compliance per Public Act 202 of 2017 and implementation of their corrective action plan.

Changes Made:

• Modern Plan Design: o 1/1/2006, the retirees began paying $50/month for their healthcare. o 1/1/2010, Wexford County Road Commission entered into a collective bargaining

agreement with the United Steel Workers (USW), which offers no retirement health care to employees hired after 7/6/2010. According to Wexford County Road Commission, the contract also stipulates

current employees will earn 4% per year worked towards their healthcare in retirement (i.e. 20 years worked = 80% the Wexford County Road Commission will pay towards their monthly premium). Section 5 and 8 of the contract included in their corrective action plan show that the Wexford County Road Commission will pay the cost of supplemental insurance for Medicare.

o 1/1/2012 the Wexford County Road Commission implemented a plan that allows current employees to earn 4% per year worked towards their healthcare in retirement the Administrative employees and the Employer shall pay the cost of such supplemental insurance for the employee once they reach the age of 62.

o 1/1/2015 the Wexford County Road Commission switched the current retirees from Priority Health to Hartford/Benestar to lower premiums; however, we were not able to verify this in the documentation submitted.

o 3/1/2016 the WCRC entered into an agreement with the administrative staff that bought out their retiree healthcare benefit.

o 4/7/2016 the Wexford County Road Commission entered into a Letter of Understanding with the USW that bought out their retiree healthcare benefit. These agreements eliminated healthcare in retirement for all current employees.

• Plan Funding: o 8/29/2018 the WCRC Board passed a resolution for implementing the MERS Retiree

Health Funding Vehicle (RHFV) trust and to change its funding methodology from Pay-Go to full funding of the ARC each year. The ARC is currently $26,380 per year in



addition to paying the ARC, Wexford County Road Commission states they will continue to pay the retirees premium payment.

• Other Considerations: o Their plan is closed, they have 16 retirees with an average age of 75. Wexford County

Road Commission uses the Governmental Accounting Standards Board (GASB) approved alternative method for their health care system. This is confirmed in their 2016 valuation.

Prospective Changes:

• Modern Plan Design: o Wexford County Road Commission is working with MERS, Mercer 365, and their labor

attorney to negotiate a monthly stipend for current retirees. They anticipate this change will be made in 2019.

• Plan Funding: o None listed.

• Other Considerations:

o Wexford County Road Commission noted that the Pay-Go method, which was utilized in 2017, resulted in $62,776 cost for retiree healthcare, is affordable for their local unit. They note that “with our population of retirees growing older, the changes we've already made, and changes we are proposing, our UML will be zero by 2034”.

Plan size: 16 members

• Inactive employees or beneficiaries currently receiving benefits: 16 • Inactive employees entitled to but not yet receiving benefits: 0 • Active employees: 0

Corrective Action Plan Criteria:

The following corrective action plan approval criteria are met:

• Underfunded Status: o The corrective action plan demonstrates it will reach the PA 202 established funding

level of 40% funded as demonstrated by the GASB approved alternative method found in the corrective action plan.

• Reasonable Timeframe: o The corrective action plan demonstrates the local unit reaches the PA 202 established

funding level of 40% within a reasonable timeframe (2025).



• Legal and Feasible: o The local unit’s corrective action plan appears to follow all applicable laws. The actions

listed appear reasonable and the corrective action plan has been approved by the governing body

• Affordable: o The local unit confirms in section 5 of the corrective action plan template that the

corrective actions listed will allow for the local unit to make, at a minimum, the retiree premium payment, as well as the normal cost payment for all new hires (if applicable) according to the long-term budget forecast.

Supplemental Information:

The Wexford County Road Commission included an internal valuation showing they will reach 40% funded in fiscal year 2025

The Community Engagement and Finance Division (CEFD) contact:

• None noted.

Wexford County Road Commission

January 1, 2014 to December 31, 2014

315 South Kalamazoo MallKalamazoo, Michigan 49007

(800) 748-0554

Prepared by:

For the Period

WEXFORD COUNTY ROAD COMMISSION

AS PROVIDED FOR UNDER THE ALTERNATE CALCULATION PROVISIONS OF

GASB STATEMENTS NO. 43 & 45

ACCOUNTING REPORT AND VALUATION

OPEB BENEFITS

INTRODUCTION

To the Board of the Wexford County Road Commission:

Burnham & Flower Group is a full-service insurance agency providing group benefits andand benefits consulting to governmental entities. In addition, we provide benefitsadministration for health and retirement plans through our third-party administration (TPA)department.

An employer with fewer than 100 plan members has the option to use the simplifiedalternative calculation method under GASB 45 instead of obtaining an actuarial valuation.This report was prepared by Burnham & Flower TPA team members using the alternative calculation method with information provided by the employer. It is not an actuarial valuation.

Burnham & Flower's TPA staff have acquired knowledge of the alternate calculation methodthrough training, research and work experience. These employees are not required to hold the certification of an Enrolled Actuary to complete the alternate calculation process.

The calculations summarized in this report require assumptions about future events.In all circumstances, we have endeavored to use assumptions that are reasonable and appropriate given the intended purpose of the report. However, there may be otherassumptions that would also be both reasonable and appropriate and would returna different result.

Prepared by:

I About GASB 45 and the Alternate Calculation Method

II Annual Required Contribution and Liability Assumptions

III Notes to the Employer's Financial Statements

IV Annual Required Contribution (ARC) Calculation

V Annual Cost/Obligation Calculation

VI Schedules

Appendices

Table 1 Probability of Remaining Employed until Assumed Retirement Age, by Age

Table 2 Expected Future Working Lifetimes of Employees, by Age—Default Values

Table 3 Mortality

Table 4 GASB Terms Defined

WEXFORD COUNTY ROAD COMMISSIONOPEB BENEFITS

TABLE OF CONTENTS

About GASB 45

Governmental Accounting Standards Board Statement No. 45 ("GASB 45") requires governmentalentities to change the way the cost of Other Post-Employment Benefits (OPEBs) are reported.Currently, most governmental entities both finance and report OPEB costs as they are incurred.However, GASB believes that the cost of such benefits should be associated with the period inwhich those benefits are earned by the participant, rather than when the cost associated withproviding those benefits are paid.

GASB 45 Effective Dates

The provisions of GASB will be phased in over a period of three years. Although GASB doesencourage early implementation, the timetable for required compliance is as follows:

Phase 1 governments (those with total annual revenue of more than $100 million) Statement is effective for periods beginning after December 15, 2006

Phase 2 governments (total annual revenue between $10 million and $100 million) Statement is effective for periods beginning after December 15, 2007

Phase 3 governments (total annual revenue of less than $10 million) Statement is effective for periods beginning after December 15, 2008

About The Alternative Measurement Method

Under certain circumstances, a single employer that operates a Plan with less that 100 total members (including active employees, inactive employees who are not yet receiving benefits, retirees, and beneficiaries) may apply a simplified measurement method in lieu of obtaining an actuarial valuation. This alternate calculation requires the same broad measurement steps aswould be necessary in the actuarial process, but allows an organization to utilize a set ofpredetermined assumptions that simplify the calculations necessary to determine the OPEBliability. This liability must be represented in the organization's financial statements in the same manner as the traditional actuarial valuation.

Some Important Notes on Funding:

GASB 45 does not change the cost or any of the provisions that relate to providing OPEBs. Only the timing and method of recognizing these costsis addressed.

GASB 45 does not require an organization to set aside assets to fund OPEBs. Employers may continue to fund the cost of benefits on a "pay as you go" basis.However, GASB 45 requires that an organization recognize any liability thatresults from the application of GASB 45 as an unfunded liability. Any pre-fundingthe employer accumulates in a separate trust will directly reduce the amount ofunfunded liabililty the organization must recognize on its balance sheet.

In addition, to the item above, there is yet another benefit to prefunding. GASBspecifies a Discount Rate of 4% to be used in the Alternate Calculation. However,if assets are set aside, GASB allows the organization to increase the Discount Rateto one of the following: 1) The actual rate of return on the GASB Trust (if the ARC isfully funded each year) or 2) a blended rate (if the ARC is partially funded). An increasein the Discount Rate will in turn lower the ARC in the years following the initial funding.


I

The following assumptions were used in the preparation of the alternate calculationand are considered to be reasonable for this plan:

ACTUARIAL COST METHOD: Alternate Method as provided under GASB 45

DISCOUNT RATE: 4.00%

MORTALITY PRIOR TO RETIREMENT: None

TURNOVER PRIOR TO RETIREMENT: See Table 1

EXPECTED FUTURE WORKING LIFE: See Table 2

SALARY SCALE: 2.00%

POST RETIREMENT INTEREST RATE: 4.00%

POST RETIREMENT MORTALITY: See Table 3

HEALTH CARE INFLATION RATE: NATIONAL HEALTH EXPENDITURESTABLE 3; Calendar Years 2005-2020

INTEREST ON NET OPEB OBLIGATION: 4.00%

FOR DETERMINATION OF CURRENT LIABILITY

II


FOR VALUATION OF THE ANNUAL REQUIRED CONTRIBUTION

ASSUMPTIONS FOR OPEB COST

NOTES TO EMPLOYER'S FINANCIAL STATEMENTS:

1. The Measurement Year for this Plan begins: January 1, 2014

2. The demographic assumptions used (retirement and termination rates, and salary increases, if any) are as of: December 31, 2014

3. The Wexford County Road Commission Retiree Medical Plan is a single-employer Plan administered by the Commission and can be amended at its discretion.

4. At the time of this reporting, membership of the plan consisted of the following:

Active Plan Members 24 Retirees and beneficiaries receiving benefits 16

Total Plan Members 40

5. The Commission has the authority to establish the funding policy for the Plan, and to amend the obligations of both the Commission and members.

6. Active members are not obligated to make contributions to the Plan at this time.

7. As of the date of this reporting, the organization has not yet made contributions to the Trust that are in excess of the benefit payments due in the current year.


III

Using the Entry Age Cost Method and the UAAL Amortized as a Level Percentage of Payroll

Normal Cost Component Normal Cost 78,242.23$ Interest 3,129.69$ Total Normal Cost 81,371.92$

Amortization Component AAL 2,842,738.55$ Less: Assets -$ UAAL 2,842,738.55$ Divided by PV factor 22.9592 Amortization payment 123,817.00$ Interest 4,953.00$ Total Amortization Payment 128,770.00$

Annual Required Contribution 210,141.92$

IV


DETERMINATION OF ANNUAL REQUIRED CONTRIBUTION (ARC)

1 Annual Required Contribution 210,141.92$

2 Interest on Net OPEB Obligation 34,486.32$

3 Adjustments to ARC 38,288.00$

4 Annual OPEB Cost (Line 1 + Line 2 - Line 3) 206,340.24$

5 Contributions Made * 60,157.00$

6 Increase/Decrease in net OPEB Obligation (Line 4 - Line 5) 146,183.24$

7 Net OPEB obligation (beginning of year) ** 862,158.00$

8 Net OPEB obligation (end of year) (Line 6 + Line 7) 1,008,341.24$

* Anticipated annual benefit payments (premiums) on behalf of retired participants and qualified trust contributions.

ANNUAL COST FOR OTHER POST-EMPLOYMENT BENEFITS (OPEB)

V


This reconciliation must be disclosed in the footnotesto the sponsor's financial statements.

1 Fair value of Assets at end of year -$

2 Actual Distributions -$

3 Actual or Accrued contributions -$

4 Fair value at beginning of year -$

5 Actual return on Assets -$ (Line 1 + Line 2 - Line 3 - Line 4)

6 Expected return on Assets -$

(Based on Interest Rate Assumption on Page II)

7 Asset (gain) or loss = 6 - 5 -$ (An asset gain is shown as a negative number)

As of the date of this reporting, the Plan had no assets set aside in Trust.

SCHEDULE 1

ASSET (GAIN) OR LOSS

VI


Table 1—Probability of Remaining Employed until Assumed Retirement Age, by Age—Default Values

Age50 and over 49 48 47 46 45

20 0.296 0.300 0.304 0.309 0.314 0.31921 0.321 0.326 0.330 0.335 0.340 0.34622 0.349 0.354 0.359 0.364 0.370 0.37623 0.379 0.384 0.389 0.395 0.401 0.40824 0.410 0.416 0.421 0.428 0.434 0.44125 0.440 0.446 0.453 0.460 0.467 0.47426 0.472 0.478 0.485 0.493 0.500 0.50827 0.503 0.510 0.517 0.525 0.533 0.54228 0.534 0.541 0.549 0.558 0.566 0.57529 0.564 0.572 0.580 0.589 0.598 0.60730 0.593 0.602 0.610 0.620 0.629 0.63931 0.622 0.631 0.640 0.650 0.660 0.67032 0.650 0.659 0.669 0.679 0.689 0.70033 0.677 0.687 0.696 0.707 0.718 0.73034 0.703 0.713 0.723 0.734 0.745 0.75835 0.729 0.739 0.749 0.761 0.772 0.78536 0.753 0.764 0.775 0.787 0.799 0.81237 0.777 0.788 0.799 0.811 0.824 0.83738 0.799 0.811 0.822 0.835 0.847 0.86139 0.821 0.832 0.844 0.857 0.870 0.88440 0.841 0.853 0.865 0.878 0.891 0.90641 0.860 0.873 0.885 0.899 0.912 0.92742 0.879 0.891 0.904 0.918 0.932 0.94743 0.896 0.909 0.922 0.936 0.950 0.96544 0.912 0.925 0.938 0.953 0.967 0.98345 0.928 0.941 0.955 0.969 0.984 1.00046 0.943 0.957 0.970 0.985 1.000 1.00047 0.958 0.971 0.985 1.000 1.000 1.00048 0.972 0.986 1.000 1.000 1.000 1.00049 0.986 1.000 1.000 1.000 1.000 1.00050 1.000 1.000 1.000 1.000 1.000 1.00051 1.000 1.000 1.000 1.000 1.000 1.00052 1.000 1.000 1.000 1.000 1.000 1.00053 1.000 1.000 1.000 1.000 1.000 1.00054 1.000 1.000 1.000 1.000 1.000 1.00055 1.000 1.000 1.000 1.000 1.000 1.00056 1.000 1.000 1.000 1.000 1.000 1.00057 1.000 1.000 1.000 1.000 1.000 1.00058 1.000 1.000 1.000 1.000 1.000 1.00059 1.000 1.000 1.000 1.000 1.000 1.00060 1.000 1.000 1.000 1.000 1.000 1.00061 1.000 1.000 1.000 1.000 1.000 1.00062 1.000 1.000 1.000 1.000 1.000 1.00063 1.000 1.000 1.000 1.000 1.000 1.00064 1.000 1.000 1.000 1.000 1.000 1.00065 1.000 1.000 1.000 1.000 1.000 1.00066 1.000 1.000 1.000 1.000 1.000 1.00067 1.000 1.000 1.000 1.000 1.000 1.00068 1.000 1.000 1.000 1.000 1.000 1.00069 1.000 1.000 1.000 1.000 1.000 1.00070 1.000 1.000 1.000 1.000 1.000 1.00071 1.000 1.000 1.000 1.000 1.000 1.00072 1.000 1.000 1.000 1.000 1.000 1.00073 1.000 1.000 1.000 1.000 1.000 1.00074 1.000 1.000 1.000 1.000 1.000 1.00075 1.000 1.000 1.000 1.000 1.000 1.000

Assumed Retirement Age

Table 2—Expected Future Working Lifetimes of Employees, by Age—Default Values

Age Assumed Retirement Age75 74 73 72 71 70 69 68 67 66 65 64 63 62 61 60 59 58 57 56 55 54 53 52 51 50 49 48 47 46 45

20 22 22 21 21 21 21 20 20 20 19 19 19 19 18 18 18 17 17 17 16 16 16 16 15 15 15 14 14 14 13 1321 23 23 22 22 22 21 21 21 20 20 20 19 19 19 18 18 18 17 17 17 16 16 16 15 15 15 15 14 14 14 1322 24 23 23 23 22 22 22 21 21 21 20 20 20 19 19 19 18 18 17 17 17 16 16 16 15 15 15 14 14 14 1323 25 24 24 24 23 23 22 22 22 21 21 21 20 20 19 19 19 18 18 18 17 17 16 16 16 15 15 14 14 14 1324 26 25 25 24 24 24 23 23 22 22 22 21 21 20 20 19 19 19 18 18 17 17 17 16 16 15 15 15 14 14 1325 26 26 26 25 25 24 24 23 23 23 22 22 21 21 20 20 19 19 19 18 18 17 17 16 16 15 15 15 14 14 1326 27 27 26 26 25 25 24 24 24 23 23 22 22 21 21 20 20 19 19 18 18 17 17 16 16 16 15 15 14 14 1327 28 28 27 27 26 26 25 25 24 24 23 23 22 21 21 20 20 19 19 18 18 17 17 16 16 15 15 14 14 13 1328 29 28 28 27 27 26 25 25 24 24 23 23 22 22 21 21 20 20 19 19 18 17 17 16 16 15 15 14 14 13 1329 29 29 28 28 27 26 26 25 25 24 24 23 22 22 21 21 20 20 19 19 18 17 17 16 16 15 15 14 13 13 1230 30 29 29 28 27 27 26 26 25 24 24 23 23 22 21 21 20 20 19 18 18 17 17 16 15 15 14 14 13 12 1231 30 30 29 28 28 27 26 26 25 25 24 23 23 22 21 21 20 20 19 18 18 17 16 16 15 15 14 13 13 12 1132 30 30 29 28 28 27 27 26 25 25 24 23 23 22 21 21 20 19 19 18 17 17 16 15 15 14 14 13 12 11 1133 31 30 29 29 28 27 27 26 25 25 24 23 23 22 21 21 20 19 18 18 17 16 16 15 14 14 13 12 12 11 1034 31 30 29 29 28 27 27 26 25 24 24 23 22 22 21 20 20 19 18 17 17 16 15 15 14 13 13 12 11 10 1035 31 30 29 29 28 27 27 26 25 24 24 23 22 21 21 20 19 18 18 17 16 16 15 14 13 13 12 11 10 10 936 31 30 29 29 28 27 26 26 25 24 23 23 22 21 20 20 19 18 17 17 16 15 14 14 13 12 11 11 10 9 837 31 30 29 28 28 27 26 25 25 24 23 22 22 21 20 19 18 18 17 16 15 15 14 13 12 11 11 10 9 8 738 31 30 29 28 27 27 26 25 24 23 23 22 21 20 19 19 18 17 16 16 15 14 13 12 12 11 10 9 8 7 739 30 30 29 28 27 26 26 25 24 23 22 21 21 20 19 18 17 17 16 15 14 13 12 12 11 10 9 8 7 7 640 30 29 29 28 27 26 25 24 23 23 22 21 20 19 18 18 17 16 15 14 13 13 12 11 10 9 8 7 7 6 541 30 29 28 27 26 26 25 24 23 22 21 20 20 19 18 17 16 15 14 14 13 12 11 10 9 8 8 7 6 5 442 30 29 28 27 26 25 24 23 22 22 21 20 19 18 17 16 15 15 14 13 12 11 10 9 8 8 7 6 5 4 343 29 28 27 26 25 25 24 23 22 21 20 19 18 17 17 16 15 14 13 12 11 10 9 8 8 7 6 5 4 3 244 29 28 27 26 25 24 23 22 21 20 19 19 18 17 16 15 14 13 12 11 10 9 9 8 7 6 5 4 3 2 145 28 27 26 25 24 23 22 22 21 20 19 18 17 16 15 14 13 12 11 10 9 9 8 7 6 5 4 3 2 1 046 27 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 11 10 9 8 7 6 5 4 3 2 1 0 047 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 048 26 25 24 23 22 21 20 19 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 049 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 050 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 051 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 052 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 053 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 054 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 055 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 056 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 057 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 058 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 059 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 060 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 061 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 062 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 063 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 064 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 065 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 066 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 067 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 068 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 069 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 070 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 071 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 072 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 073 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 074 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Table 3—Mortality

United States Life Tables - 2007 version

0–1 . . . . . . . . 0 75.4 0 80.4 80–81 . . . . . . 80 7.9 80 9.41–2 . . . . . . . . 1 74.9 1 79.9 81–82 . . . . . . 81 7.5 81 8.82–3 . . . . . . . . 2 74.0 2 78.9 82–83 . . . . . . 82 7.0 82 8.33–4 . . . . . . . . 3 73.0 3 78 83–84 . . . . . . 83 6.6 83 7.84–5 . . . . . . . . 4 72.0 4 77 84–85 . . . . . . 84 6.2 84 7.35–6 . . . . . . . . 5 71.0 5 76 85–86 . . . . . . 85 5.8 85 6.86–7 . . . . . . . . 6 70.0 6 75 86–87 . . . . . . 86 5.4 86 6.47–8 . . . . . . . . 7 69.1 7 74 87–88 . . . . . . 87 5.1 87 68–9 . . . . . . . . 8 68.1 8 73 88–89 . . . . . . 88 4.8 88 5.69–10 . . . . . . . 9 67.1 9 72 89–90 . . . . . . 89 4.4 89 5.210–11. . . . . . . 10 66.1 10 71 90–91 . . . . . . 90 4.1 90 4.811–12. . . . . . . 11 65.1 11 70 91–92 . . . . . . 91 3.9 91 4.512–13 . . . . . . 12 64.1 12 69 92–93 . . . . . . 92 3.6 92 4.213–14 . . . . . . 13 63.1 13 68 93–94 . . . . . . 93 3.4 93 3.914–15 . . . . . . 14 62.1 14 67.1 94–95 . . . . . . 94 3.1 94 3.615–16 . . . . . . 15 61.1 15 66.1 95–96 . . . . . . 95 2.9 95 3.316–17 . . . . . . 16 60.2 16 65.1 96–97 . . . . . . 96 2.7 96 3.117–18 . . . . . . 17 59.2 17 64.1 97–98 . . . . . . 97 2.5 97 2.918–19 . . . . . . 18 58.3 18 63.1 98–99 . . . . . . 98 2.4 98 2.719–20 . . . . . . 19 57.3 19 62.2 99–100 . . . . . 99 2.2 99 2.520–21 . . . . . . 20 56.4 20 61.2 100+ . . . . . . . 100 2.1 100 2.321–22 . . . . . . 21 55.5 21 60.222–23 . . . . . . 22 54.5 22 59.223–24 . . . . . . 23 53.6 23 58.324–25 . . . . . . 24 52.7 24 57.325–26 . . . . . . 25 51.8 25 56.326–27 . . . . . . 26 50.9 26 55.427–28 . . . . . . 27 49.9 27 54.428–29 . . . . . . 28 49.0 28 53.429–30 . . . . . . 29 48.1 29 52.430–31 . . . . . . 30 47.1 30 51.531–32 . . . . . . 31 46.2 31 50.532–33 . . . . . . 32 45.3 32 49.533–34 . . . . . . 33 44.3 33 48.634–35 . . . . . . 34 43.4 34 47.635–36 . . . . . . 35 42.5 35 46.736–37 . . . . . . 36 41.5 36 45.737–38 . . . . . . 37 40.6 37 44.738–39 . . . . . . 38 39.7 38 43.839–40 . . . . . . 39 38.8 39 42.840–41 . . . . . . 40 37.8 40 41.941–42 . . . . . . 41 36.9 41 40.942–43 . . . . . . 42 36.0 42 4043–44 . . . . . . 43 35.1 43 39.144–45 . . . . . . 44 34.2 44 38.145–46 . . . . . . 45 33.3 45 37.246–47 . . . . . . 46 32.4 46 36.347–48 . . . . . . 47 31.6 47 35.448–49 . . . . . . 48 30.7 48 34.549–50 . . . . . . 49 29.8 49 33.650–51 . . . . . . 50 29.0 50 32.751–52 . . . . . . 51 28.1 51 31.852–53 . . . . . . 52 27.3 52 30.953–54 . . . . . . 53 26.5 53 30

Males Females Males Females

Table 4

GASB Terms Defined A brief glossary of terms commonly used by GASB practitioners, actuaries, and auditors. Actuarial Accrued Liability (AAL): The value of OPEB benefits already earned by each eligible

employee for that employee’s past service. Also, the Actuarial Present Value of Total Projected Benefits not provided for by future normal costs.

Annual OPEB Cost: An accrual-basis measure of an employer’s periodic cost of offering OPEB. It is the

current period’s ARC, plus any interest on the previous period’s Net OPEB obligation, minus any adjustments necessary to the ARC.

Annual Required Contribution (ARC): The level of employer contribution that would be required on an

ongoing basis to reduce the employer’s net OPEB obligation to zero. The ARC has two components: 1) The normal cost and 2) the amortized amount of the UAAL for both active employees and retirees. In other words, it is the amount needed to pay benefits as they come due, as well as to amortize additional liability over a specified period (which cannot be more than 30 years.)

Employer Contributions: Contributions made for OPEB in relation to the ARC. An employer has made a

contribution in relation to the ARC if the employer has: Made a payment of benefits directly to or on behalf of a retiree or beneficiary; Made premium payments to an insurer; or Irrevocably transferred assets to a trust in which plan assets are dedicated to providing

benefits to retirees and/or beneficiaries. Assets that employers merely set aside for future benefits do not qualify as contributions for purposes of GASB 45.

Net OPEB Obligation (or asset): The difference arrived at by subtracting all employer contributions from

the annual OPEB cost. The net OPEB obligation is reported as a liability (or asset) in the accrual-basis financial statements.

Normal Cost: That portion of the Actuarial Present Value that is allocated to each valuation year by an

actuarial cost method. Under most actuarial methods, Normal cost can be thought of as the cost for OPEB being earned by employees in exchange for current service. Any employer with at least one OPEB-eligible employee will have a Normal cost each year.

Pay-As-You-Go: A method of financing an OPEB under which the contributions to the plan are generally

made at about the same time and are equal to the amount of retiree benefit payments and expenses coming due. Employers that finance benefits on a pay-as-you-go basis typically make payments directly to a provider.

Plan Assets: Financial resources that have been segregated into a trust for the payment of benefits in

accordance with the terms of the plan. Employer contributions to the trust are irrevocable, and assets are dedicated to providing benefits to retirees and their beneficiaries. Plan assets are also legally protected from creditors of the employer. Assets set aside by employers for OPEB, but not deposited in a trust, are considered employer assets and not Plan assets.

Plan Liabilities: Obligations payable by the plan at the reporting date. These obligations include benefits

and refunds due and payable to plan members and beneficiaries, and accrued investment and administrative expenses. Plan liabilities do not include actuarial accrued liabilities for benefits that are not due and payable at the reporting date.

Unfunded Actuarial Accrued Liability (UAAL): The portion of the AAL over and above the Actuarial

Value of Plan Assets. The UAAL is determined by three things: unfunded past Normal costs, actuarial gains and losses (differences between actuarial assumptions and actual experience), and changes to the amount of promised benefits.


January 1, 2016 to December 31, 2016

315 South Kalamazoo MallKalamazoo, Michigan 49007

(800) 748-0554

Prepared by:

For the Period


AS PROVIDED FOR UNDER THE ALTERNATE CALCULATION PROVISIONS OF

GASB STATEMENTS NO. 43 & 45

ACCOUNTING REPORT AND VALUATION

OPEB BENEFITS

INTRODUCTION

To the Board of the Wexford County Road Commission:

Burnham & Flower Group is a full-service insurance agency providing group benefits andand benefits consulting to governmental entities. In addition, we provide benefitsadministration for health and retirement plans through our third-party administration (TPA)department.

An employer with fewer than 100 plan members has the option to use the simplifiedalternative calculation method under GASB 45 instead of obtaining an actuarial valuation.This report was prepared by Burnham & Flower TPA team members using the alternative calculation method with information provided by the employer. It is not an actuarial valuation.

Burnham & Flower's TPA staff have acquired knowledge of the alternate calculation methodthrough training, research and work experience. These employees are not required to hold the certification of an Enrolled Actuary to complete the alternate calculation process.

The calculations summarized in this report require assumptions about future events.In all circumstances, we have endeavored to use assumptions that are reasonable and appropriate given the intended purpose of the report. However, there may be otherassumptions that would also be both reasonable and appropriate and would returna different result.

Prepared by:

I About GASB 45 and the Alternate Calculation Method

II Annual Required Contribution and Liability Assumptions

III Notes to the Employer's Financial Statements

IV Annual Required Contribution (ARC) Calculation

V Annual Cost/Obligation Calculation

VI Schedules

Appendices

Table 1 Probability of Remaining Employed until Assumed Retirement Age, by Age

Table 2 Expected Future Working Lifetimes of Employees, by Age—Default Values

Table 3 Mortality

Table 4 GASB Terms Defined


TABLE OF CONTENTS

About GASB 45

Governmental Accounting Standards Board Statement No. 45 ("GASB 45") requires governmentalentities to change the way the cost of Other Post-Employment Benefits (OPEBs) are reported.Currently, most governmental entities both finance and report OPEB costs as they are incurred.However, GASB believes that the cost of such benefits should be associated with the period inwhich those benefits are earned by the participant, rather than when the cost associated withproviding those benefits are paid.

GASB 45 Effective Dates

The provisions of GASB will be phased in over a period of three years. Although GASB doesencourage early implementation, the timetable for required compliance is as follows:

Phase 1 governments (those with total annual revenue of more than $100 million) Statement is effective for periods beginning after December 15, 2006

Phase 2 governments (total annual revenue between $10 million and $100 million) Statement is effective for periods beginning after December 15, 2007

Phase 3 governments (total annual revenue of less than $10 million) Statement is effective for periods beginning after December 15, 2008

About The Alternative Measurement Method

Under certain circumstances, a single employer that operates a Plan with less that 100 total members (including active employees, inactive employees who are not yet receiving benefits, retirees, and beneficiaries) may apply a simplified measurement method in lieu of obtaining an actuarial valuation. This alternate calculation requires the same broad measurement steps aswould be necessary in the actuarial process, but allows an organization to utilize a set ofpredetermined assumptions that simplify the calculations necessary to determine the OPEBliability. This liability must be represented in the organization's financial statements in the same manner as the traditional actuarial valuation.

Some Important Notes on Funding:

GASB 45 does not change the cost or any of the provisions that relate to providing OPEBs. Only the timing and method of recognizing these costsis addressed.

GASB 45 does not require an organization to set aside assets to fund OPEBs. Employers may continue to fund the cost of benefits on a "pay as you go" basis.However, GASB 45 requires that an organization recognize any liability thatresults from the application of GASB 45 as an unfunded liability. Any pre-fundingthe employer accumulates in a separate trust will directly reduce the amount ofunfunded liabililty the organization must recognize on its balance sheet.

In addition, to the item above, there is yet another benefit to prefunding. GASBspecifies a Discount Rate of 4% to be used in the Alternate Calculation. However,if assets are set aside, GASB allows the organization to increase the Discount Rateto one of the following: 1) The actual rate of return on the GASB Trust (if the ARC isfully funded each year) or 2) a blended rate (if the ARC is partially funded). An increasein the Discount Rate will in turn lower the ARC in the years following the initial funding.


I

The following assumptions were used in the preparation of the alternate calculationand are considered to be reasonable for this plan:

ACTUARIAL COST METHOD: Entry Age Cost Method/Level Percentage of Payroll

DISCOUNT RATE: 4.00%

MORTALITY PRIOR TO RETIREMENT: None

TURNOVER PRIOR TO RETIREMENT: See Table 1

EXPECTED FUTURE WORKING LIFE: See Table 2

SALARY SCALE: 2.50%

POST RETIREMENT INTEREST RATE: 4.00%

POST RETIREMENT MORTALITY: See Table 3

HEALTH CARE INFLATION RATE: NATIONAL HEALTH EXPENDITURESTABLE 3; Calendar Years 2008-2024

INTEREST ON NET OPEB OBLIGATION: 4.00%

FOR DETERMINATION OF CURRENT LIABILITY

II


FOR VALUATION OF THE ANNUAL REQUIRED CONTRIBUTION

ASSUMPTIONS FOR OPEB COST

NOTES TO EMPLOYER'S FINANCIAL STATEMENTS:

1. The Measurement Year for this Plan begins: January 1, 2016 The date of initial application of GASB 43/45 is: January 1, 2008

2. The demographic assumptions used (retirement and termination rates, and salary increases, if any) are as of: December 31, 2016

3. The Wexford County Road Commission Retiree Medical Plan is a single-employer Plan administered by the Road Commission and can be amended at its discretion.

4. At the time of this reporting, membership of the plan consisted of the following:

Active Plan Members 0 Retirees and beneficiaries receiving benefits 16

Total Plan Members 16

5. The Road Commission has the authority to establish the funding policy for the Plan, and to amend the obligations of both the Road Commission and members.

6. Active members are not obligated to make contributions to the Plan at this time.

7. As of the date of this reporting, the organization has not yet made contributions to the Trust that are in excess of the benefit payments due in the current year.


III

Using the Entry Age Cost Method and the UAAL Amortized as a Level Percentage of Payroll

Normal Cost Component Normal Cost -$ Interest -$ Total Normal Cost -$

Amortization Component AAL 621,286.75$ Less: Assets -$ UAAL 621,286.75$ Divided by PV factor 24.4941 Amortization payment 25,365.00$ Interest 1,015.00$ Total Amortization Payment 26,380.00$

Annual Required Contribution 26,380.00$

IV


DETERMINATION OF ANNUAL REQUIRED CONTRIBUTION (ARC)

1 Annual Required Contribution 26,380.00$

2 Interest on Net OPEB Obligation 47,730.12$

3 Adjustments to ARC * 941,611.00$

4 Annual OPEB Cost (Line 1 + Line 2 - Line 3) (867,500.88)$

5 Contributions Made ** 67,998.00$

6 Increase/Decrease in net OPEB Obligation (Line 4 - Line 5) (935,498.88)$

7 Net OPEB obligation (beginning of year) 1,193,253.00$

8 Net OPEB obligation (end of year) (Line 6 + Line 7) 257,754.12$ * ARC adjustment includes 930,737 adjustment based on significant change in AAL due to benefit changes in last reporting period.** Anticipated annual benefit payments (premiums) on behalf of retired participants and qualified trust contributions.

ANNUAL COST FOR OTHER POST-EMPLOYMENT BENEFITS (OPEB)

V


This reconciliation must be disclosed in the footnotesto the sponsor's financial statements.










SCHEDULE 1


VI











SCHEDULE 1


VI


Table 1—Probability of Remaining Employed until Assumed Retirement Age, by Age—Default Values

Age50 and over 49 48 47 46 45

20 0.296 0.300 0.304 0.309 0.314 0.31921 0.321 0.326 0.330 0.335 0.340 0.34622 0.349 0.354 0.359 0.364 0.370 0.37623 0.379 0.384 0.389 0.395 0.401 0.40824 0.410 0.416 0.421 0.428 0.434 0.44125 0.440 0.446 0.453 0.460 0.467 0.47426 0.472 0.478 0.485 0.493 0.500 0.50827 0.503 0.510 0.517 0.525 0.533 0.54228 0.534 0.541 0.549 0.558 0.566 0.57529 0.564 0.572 0.580 0.589 0.598 0.60730 0.593 0.602 0.610 0.620 0.629 0.63931 0.622 0.631 0.640 0.650 0.660 0.67032 0.650 0.659 0.669 0.679 0.689 0.70033 0.677 0.687 0.696 0.707 0.718 0.73034 0.703 0.713 0.723 0.734 0.745 0.75835 0.729 0.739 0.749 0.761 0.772 0.78536 0.753 0.764 0.775 0.787 0.799 0.81237 0.777 0.788 0.799 0.811 0.824 0.83738 0.799 0.811 0.822 0.835 0.847 0.86139 0.821 0.832 0.844 0.857 0.870 0.88440 0.841 0.853 0.865 0.878 0.891 0.90641 0.860 0.873 0.885 0.899 0.912 0.92742 0.879 0.891 0.904 0.918 0.932 0.94743 0.896 0.909 0.922 0.936 0.950 0.96544 0.912 0.925 0.938 0.953 0.967 0.98345 0.928 0.941 0.955 0.969 0.984 1.00046 0.943 0.957 0.970 0.985 1.000 1.00047 0.958 0.971 0.985 1.000 1.000 1.00048 0.972 0.986 1.000 1.000 1.000 1.00049 0.986 1.000 1.000 1.000 1.000 1.00050 1.000 1.000 1.000 1.000 1.000 1.00051 1.000 1.000 1.000 1.000 1.000 1.00052 1.000 1.000 1.000 1.000 1.000 1.00053 1.000 1.000 1.000 1.000 1.000 1.00054 1.000 1.000 1.000 1.000 1.000 1.00055 1.000 1.000 1.000 1.000 1.000 1.00056 1.000 1.000 1.000 1.000 1.000 1.00057 1.000 1.000 1.000 1.000 1.000 1.00058 1.000 1.000 1.000 1.000 1.000 1.00059 1.000 1.000 1.000 1.000 1.000 1.00060 1.000 1.000 1.000 1.000 1.000 1.00061 1.000 1.000 1.000 1.000 1.000 1.00062 1.000 1.000 1.000 1.000 1.000 1.00063 1.000 1.000 1.000 1.000 1.000 1.00064 1.000 1.000 1.000 1.000 1.000 1.00065 1.000 1.000 1.000 1.000 1.000 1.00066 1.000 1.000 1.000 1.000 1.000 1.00067 1.000 1.000 1.000 1.000 1.000 1.00068 1.000 1.000 1.000 1.000 1.000 1.00069 1.000 1.000 1.000 1.000 1.000 1.00070 1.000 1.000 1.000 1.000 1.000 1.00071 1.000 1.000 1.000 1.000 1.000 1.00072 1.000 1.000 1.000 1.000 1.000 1.00073 1.000 1.000 1.000 1.000 1.000 1.00074 1.000 1.000 1.000 1.000 1.000 1.00075 1.000 1.000 1.000 1.000 1.000 1.000

Assumed Retirement Age

Table 2—Expected Future Working Lifetimes of Employees, by Age—Default Values

Age Assumed Retirement Age75 74 73 72 71 70 69 68 67 66 65 64 63 62 61 60 59 58 57 56 55 54 53 52 51 50 49 48 47 46 45

20 22 22 21 21 21 21 20 20 20 19 19 19 19 18 18 18 17 17 17 16 16 16 16 15 15 15 14 14 14 13 1321 23 23 22 22 22 21 21 21 20 20 20 19 19 19 18 18 18 17 17 17 16 16 16 15 15 15 15 14 14 14 1322 24 23 23 23 22 22 22 21 21 21 20 20 20 19 19 19 18 18 17 17 17 16 16 16 15 15 15 14 14 14 1323 25 24 24 24 23 23 22 22 22 21 21 21 20 20 19 19 19 18 18 18 17 17 16 16 16 15 15 14 14 14 1324 26 25 25 24 24 24 23 23 22 22 22 21 21 20 20 19 19 19 18 18 17 17 17 16 16 15 15 15 14 14 1325 26 26 26 25 25 24 24 23 23 23 22 22 21 21 20 20 19 19 19 18 18 17 17 16 16 15 15 15 14 14 1326 27 27 26 26 25 25 24 24 24 23 23 22 22 21 21 20 20 19 19 18 18 17 17 16 16 16 15 15 14 14 1327 28 28 27 27 26 26 25 25 24 24 23 23 22 21 21 20 20 19 19 18 18 17 17 16 16 15 15 14 14 13 1328 29 28 28 27 27 26 25 25 24 24 23 23 22 22 21 21 20 20 19 19 18 17 17 16 16 15 15 14 14 13 1329 29 29 28 28 27 26 26 25 25 24 24 23 22 22 21 21 20 20 19 19 18 17 17 16 16 15 15 14 13 13 1230 30 29 29 28 27 27 26 26 25 24 24 23 23 22 21 21 20 20 19 18 18 17 17 16 15 15 14 14 13 12 1231 30 30 29 28 28 27 26 26 25 25 24 23 23 22 21 21 20 20 19 18 18 17 16 16 15 15 14 13 13 12 1132 30 30 29 28 28 27 27 26 25 25 24 23 23 22 21 21 20 19 19 18 17 17 16 15 15 14 14 13 12 11 1133 31 30 29 29 28 27 27 26 25 25 24 23 23 22 21 21 20 19 18 18 17 16 16 15 14 14 13 12 12 11 1034 31 30 29 29 28 27 27 26 25 24 24 23 22 22 21 20 20 19 18 17 17 16 15 15 14 13 13 12 11 10 1035 31 30 29 29 28 27 27 26 25 24 24 23 22 21 21 20 19 18 18 17 16 16 15 14 13 13 12 11 10 10 936 31 30 29 29 28 27 26 26 25 24 23 23 22 21 20 20 19 18 17 17 16 15 14 14 13 12 11 11 10 9 837 31 30 29 28 28 27 26 25 25 24 23 22 22 21 20 19 18 18 17 16 15 15 14 13 12 11 11 10 9 8 738 31 30 29 28 27 27 26 25 24 23 23 22 21 20 19 19 18 17 16 16 15 14 13 12 12 11 10 9 8 7 739 30 30 29 28 27 26 26 25 24 23 22 21 21 20 19 18 17 17 16 15 14 13 12 12 11 10 9 8 7 7 640 30 29 29 28 27 26 25 24 23 23 22 21 20 19 18 18 17 16 15 14 13 13 12 11 10 9 8 7 7 6 541 30 29 28 27 26 26 25 24 23 22 21 20 20 19 18 17 16 15 14 14 13 12 11 10 9 8 8 7 6 5 442 30 29 28 27 26 25 24 23 22 22 21 20 19 18 17 16 15 15 14 13 12 11 10 9 8 8 7 6 5 4 343 29 28 27 26 25 25 24 23 22 21 20 19 18 17 17 16 15 14 13 12 11 10 9 8 8 7 6 5 4 3 244 29 28 27 26 25 24 23 22 21 20 19 19 18 17 16 15 14 13 12 11 10 9 9 8 7 6 5 4 3 2 145 28 27 26 25 24 23 22 22 21 20 19 18 17 16 15 14 13 12 11 10 9 9 8 7 6 5 4 3 2 1 046 27 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 11 10 9 8 7 6 5 4 3 2 1 0 047 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 048 26 25 24 23 22 21 20 19 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 049 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 050 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 051 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 052 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 053 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 054 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 055 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 056 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 057 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 058 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 059 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 060 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 061 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 062 13 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 063 12 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 064 11 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 065 10 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 066 9 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 067 8 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 068 7 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 069 6 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 070 5 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 071 4 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 072 3 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 073 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 074 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Table 3—Mortality

United States Life Tables - 2007 version

0–1 . . . . . . . . 0 75.4 0 80.4 80–81 . . . . . . 80 7.9 80 9.41–2 . . . . . . . . 1 74.9 1 79.9 81–82 . . . . . . 81 7.5 81 8.82–3 . . . . . . . . 2 74.0 2 78.9 82–83 . . . . . . 82 7.0 82 8.33–4 . . . . . . . . 3 73.0 3 78 83–84 . . . . . . 83 6.6 83 7.84–5 . . . . . . . . 4 72.0 4 77 84–85 . . . . . . 84 6.2 84 7.35–6 . . . . . . . . 5 71.0 5 76 85–86 . . . . . . 85 5.8 85 6.86–7 . . . . . . . . 6 70.0 6 75 86–87 . . . . . . 86 5.4 86 6.47–8 . . . . . . . . 7 69.1 7 74 87–88 . . . . . . 87 5.1 87 68–9 . . . . . . . . 8 68.1 8 73 88–89 . . . . . . 88 4.8 88 5.69–10 . . . . . . . 9 67.1 9 72 89–90 . . . . . . 89 4.4 89 5.210–11. . . . . . . 10 66.1 10 71 90–91 . . . . . . 90 4.1 90 4.811–12. . . . . . . 11 65.1 11 70 91–92 . . . . . . 91 3.9 91 4.512–13 . . . . . . 12 64.1 12 69 92–93 . . . . . . 92 3.6 92 4.213–14 . . . . . . 13 63.1 13 68 93–94 . . . . . . 93 3.4 93 3.914–15 . . . . . . 14 62.1 14 67.1 94–95 . . . . . . 94 3.1 94 3.615–16 . . . . . . 15 61.1 15 66.1 95–96 . . . . . . 95 2.9 95 3.316–17 . . . . . . 16 60.2 16 65.1 96–97 . . . . . . 96 2.7 96 3.117–18 . . . . . . 17 59.2 17 64.1 97–98 . . . . . . 97 2.5 97 2.918–19 . . . . . . 18 58.3 18 63.1 98–99 . . . . . . 98 2.4 98 2.719–20 . . . . . . 19 57.3 19 62.2 99–100 . . . . . 99 2.2 99 2.520–21 . . . . . . 20 56.4 20 61.2 100+ . . . . . . . 100 2.1 100 2.321–22 . . . . . . 21 55.5 21 60.222–23 . . . . . . 22 54.5 22 59.223–24 . . . . . . 23 53.6 23 58.324–25 . . . . . . 24 52.7 24 57.325–26 . . . . . . 25 51.8 25 56.326–27 . . . . . . 26 50.9 26 55.427–28 . . . . . . 27 49.9 27 54.428–29 . . . . . . 28 49.0 28 53.429–30 . . . . . . 29 48.1 29 52.430–31 . . . . . . 30 47.1 30 51.531–32 . . . . . . 31 46.2 31 50.532–33 . . . . . . 32 45.3 32 49.533–34 . . . . . . 33 44.3 33 48.634–35 . . . . . . 34 43.4 34 47.635–36 . . . . . . 35 42.5 35 46.736–37 . . . . . . 36 41.5 36 45.737–38 . . . . . . 37 40.6 37 44.738–39 . . . . . . 38 39.7 38 43.839–40 . . . . . . 39 38.8 39 42.840–41 . . . . . . 40 37.8 40 41.941–42 . . . . . . 41 36.9 41 40.942–43 . . . . . . 42 36.0 42 4043–44 . . . . . . 43 35.1 43 39.144–45 . . . . . . 44 34.2 44 38.145–46 . . . . . . 45 33.3 45 37.246–47 . . . . . . 46 32.4 46 36.347–48 . . . . . . 47 31.6 47 35.448–49 . . . . . . 48 30.7 48 34.549–50 . . . . . . 49 29.8 49 33.650–51 . . . . . . 50 29.0 50 32.751–52 . . . . . . 51 28.1 51 31.852–53 . . . . . . 52 27.3 52 30.953–54 . . . . . . 53 26.5 53 30

Males Females Males Females

Table 4

GASB Terms Defined A brief glossary of terms commonly used by GASB practitioners, actuaries, and auditors. Actuarial Accrued Liability (AAL): The value of OPEB benefits already earned by each eligible

employee for that employee’s past service. Also, the Actuarial Present Value of Total Projected Benefits not provided for by future normal costs.

Annual OPEB Cost: An accrual-basis measure of an employer’s periodic cost of offering OPEB. It is the

current period’s ARC, plus any interest on the previous period’s Net OPEB obligation, minus any adjustments necessary to the ARC.

Annual Required Contribution (ARC): The level of employer contribution that would be required on an

ongoing basis to reduce the employer’s net OPEB obligation to zero. The ARC has two components: 1) The normal cost and 2) the amortized amount of the UAAL for both active employees and retirees. In other words, it is the amount needed to pay benefits as they come due, as well as to amortize additional liability over a specified period (which cannot be more than 30 years.)

Employer Contributions: Contributions made for OPEB in relation to the ARC. An employer has made a

contribution in relation to the ARC if the employer has: Made a payment of benefits directly to or on behalf of a retiree or beneficiary; Made premium payments to an insurer; or Irrevocably transferred assets to a trust in which plan assets are dedicated to providing

benefits to retirees and/or beneficiaries. Assets that employers merely set aside for future benefits do not qualify as contributions for purposes of GASB 45.

Net OPEB Obligation (or asset): The difference arrived at by subtracting all employer contributions from

the annual OPEB cost. The net OPEB obligation is reported as a liability (or asset) in the accrual-basis financial statements.

Normal Cost: That portion of the Actuarial Present Value that is allocated to each valuation year by an

actuarial cost method. Under most actuarial methods, Normal cost can be thought of as the cost for OPEB being earned by employees in exchange for current service. Any employer with at least one OPEB-eligible employee will have a Normal cost each year.

Pay-As-You-Go: A method of financing an OPEB under which the contributions to the plan are generally

made at about the same time and are equal to the amount of retiree benefit payments and expenses coming due. Employers that finance benefits on a pay-as-you-go basis typically make payments directly to a provider.

Plan Assets: Financial resources that have been segregated into a trust for the payment of benefits in

accordance with the terms of the plan. Employer contributions to the trust are irrevocable, and assets are dedicated to providing benefits to retirees and their beneficiaries. Plan assets are also legally protected from creditors of the employer. Assets set aside by employers for OPEB, but not deposited in a trust, are considered employer assets and not Plan assets.

Plan Liabilities: Obligations payable by the plan at the reporting date. These obligations include benefits

and refunds due and payable to plan members and beneficiaries, and accrued investment and administrative expenses. Plan liabilities do not include actuarial accrued liabilities for benefits that are not due and payable at the reporting date.

Unfunded Actuarial Accrued Liability (UAAL): The portion of the AAL over and above the Actuarial

Value of Plan Assets. The UAAL is determined by three things: unfunded past Normal costs, actuarial gains and losses (differences between actuarial assumptions and actual experience), and changes to the amount of promised benefits.

Wexford CRCCalculation of Present Value of Benefits

---------------------------------------Data for Spouse-------------------------------------------

Number Assumed Age or

Year of Initial Year of Years Actual Age at

Name Employment Status Gender Birth of Employment Employed Retirement Marital Status Gender Yr of Birth Current Age

M-Male, F-Female M-married,S-single

Butcher, Lloyd Retired M 1947 1971 31 55 S 0 0 Hawkins, Jerry Retired M 1945 1996 15 66 S 0 0 Holm, John Retired M 1940 1977 24 61 S 0 0 Jeffers, Jerry Retired M 1936 1968 25 57 S 0 0 Jurik, John Retired M 1948 1990 22 64 S 0 0 Kesl, Ronald Retired M 1946 1977 24 55 S 0 0 Labar, James Retired M 1938 1966 28 56 S 0 0 Lutke, Joseph Retired M 1935 1983 18 66 S 0 0 Powell, Marvin Retired M 1939 1961 36 58 S 0 0 Richard, Dennis Retired M 1951 1997 18 64 S 0 0 Schaub, Ruth Retired F 1944 1992 14 62 S 0 0 Southwick, Joseph Retired M 1939 1964 34 59 S 0 0 Sparks, William Retired M 1943 1976 25 58 S 0 0 Truesdale, Shirley Retired F 1930 1961 27 58 S 0 0 Werner, Theodore Retired M 1940 1961 34 55 S 0 0 Hammar, Garry Retired M 1947 1996 19 68 S 0 0

Current Age Total Benefits to be PaidCurrent-Age Interest-Discounted PV of Total Benefits to be Paid

---------------------------------------Data for Spouse-------------------------------------------

Remaining Remaining Probability of Remaining

Life Life -------Used in calc to age-adjust premiums--------- Employed from CURRENT

Expectancy at Projected Yr Current Entry Expectancy at Projected Calc for premium Calc for premium Calc for premium Age until Assumed

Current Age of Death Age Age Current Age Year of Death Under 65 65 or older Total life expectancy Age of Retirement

0 69 24 14 2030 69 75.4 1.000 0 71 51 13 2029 71 75.4 1.000 0 76 37 10 2026 76 75.4 1.000 0 80 32 8 2024 80 75.4 1.000 0 68 42 15 2031 68 75.4 1.000 0 70 31 14 2030 70 75.4 1.000 0 78 28 9 2025 78 75.4 1.000 0 81 48 7 2023 81 75.4 1.000 0 77 22 9 2025 77 75.4 1.000 0 65 46 17 2033 65 75.4 1.000 0 72 48 15 2031 72 80.4 1.000 0 77 25 9 2025 77 75.4 1.000 0 73 33 12 2028 73 75.4 1.000 0 86 31 6 2022 86 80.4 1.000 0 76 21 10 2026 76 75.4 1.000 0 69 49 14 2030 69 75.4 1.000

Probability of Remaining

Employed from ENTRY

Age until Assumed 105.40% 111.20%

Age of Retirement 2017 2018

4,128 4,355 4,128 4,355 4,128 4,355 4,128 4,355 4,084 4,311 4,128 4,355 4,128 4,355 4,128 4,355 4,128 4,355 4,025 4,252 4,128 4,355 4,128 4,355 4,128 4,355 4,128 4,355 4,128 4,355 4,025 4,252

61,776 65,182

59,400 60,265

Projected Future Benefit Payments for the Years Ending------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------>

118.09%

2019

4,6254,6254,6254,6254,5814,6254,6254,6254,6254,5224,6254,6254,6254,6254,6254,522

69,233

61,548

125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53%

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037

4,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 0 0 0 0 0 0 04,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 0 0 0 0 0 0 0 04,917 4,917 4,917 4,917 4,917 4,917 4,917 0 0 0 0 0 0 0 0 0 0 04,917 4,917 4,917 4,917 4,917 0 0 0 0 0 0 0 0 0 0 0 0 04,872 4,872 4,872 4,872 4,872 4,872 4,872 4,872 4,872 4,872 4,872 4,872 0 0 0 0 0 04,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 0 0 0 0 0 0 04,917 4,917 4,917 4,917 4,917 4,917 0 0 0 0 0 0 0 0 0 0 0 04,917 4,917 4,917 4,917 0 0 0 0 0 0 0 0 0 0 0 0 0 04,917 4,917 4,917 4,917 4,917 4,917 0 0 0 0 0 0 0 0 0 0 0 04,813 4,813 4,813 4,813 4,813 4,813 4,813 4,813 4,813 4,813 4,813 4,813 4,813 4,813 0 0 0 04,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 0 0 0 0 0 04,917 4,917 4,917 4,917 4,917 4,917 0 0 0 0 0 0 0 0 0 0 0 04,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 4,917 0 0 0 0 0 0 0 0 04,917 4,917 4,917 0 0 0 0 0 0 0 0 0 0 0 0 0 0 04,917 4,917 4,917 4,917 4,917 4,917 4,917 0 0 0 0 0 0 0 0 0 0 04,813 4,813 4,813 4,813 4,813 4,813 4,813 4,813 4,813 4,813 4,813 0 0 0 0 0 0 0

73,604 73,604 73,604 68,687 63,770 58,853 44,103 34,269 34,269 29,353 24,436 14,602 4,813 4,813 0 0 0 0

62,917 60,497 58,170 52,196 46,596 41,350 29,794 22,261 21,405 17,628 14,111 8,108 2,570 2,471 0 0 0 0

125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53%

2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 2052 2053 2054 2055

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53% 125.53%

2056 2057 2058 2059 2060 2061 2062 2063 2064 2065 2066 2067 2068 2069 2070 2071 2072 2073

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Current-Age

Interest-Discounted

Current-Age Present Value of

125.53% Total Benefits Total Benefits to

2074 to be Paid Be Paid

0 67,194 50,4000 62,277 47,5610 47,527 38,3430 37,693 31,5670 71,444 52,6360 67,194 50,4000 42,610 35,0220 32,776 27,9750 42,610 35,0220 80,181 57,0180 72,111 53,1310 42,610 35,0220 57,360 44,6080 27,859 24,2380 47,527 38,3430 65,742 49,305

0 0 798,972 621,287

0 621,287

3a


2016 UAAL 621,287ARC 26,380Rate 4.75%

Interest % Funded2018 26,380 1,253 4.25%2019 54,013 2,566 8.69%2020 82,959 3,941 13.35%2021 113,279 5,381 18.23%2022 145,040 6,889 23.35%2023 178,309 8,470 28.70%2024 240,792 11,438 38.76%2025 365,509 17,362 58.83%2026 496,150 23,567 79.86%2027 698,026 33,156 112.35%2028 909,492 43,201 146.39%

7a.1


System Design Changes

On 1-1-06 the retirees began paying $50 per month for their healthcare. On 1-1-10 the WCRC entered into a new collective bargaining agreement with the United Steel Workers which offers no health care in retirement to employees hired after 7-6-10. The contract also stipulates current employees will earn 4% per year worked towards their healthcare in retirement (i.e. 20 years worked = 80% the WCRC will pay towards their monthly premium). On 1-1-12 the WCRC also implemented the same two stipulations for the Administrative employees. On 1-1-15 the WCRC switched the current retirees from Priority Health to Hartford/Benestar to lower premiums. On 3-1-16 the WCRC entered into an agreement with the administrative staff that bought out their retiree healthcare benefit (see document 7a.3, Administrative Policy pages 17 & 18). On April 7, 2016 the WCRC entered into a Letter of Understanding with the USW that bought out their retiree healthcare benefit (see document 7a.2, Union Contract page 13 and last page). These agreements eliminated healthcare in retirement for all current employees. These changes substantially decreased our unfunded liability from $2.842 million (see document 2a.1, page IV) to $621,000 (see document 2a.2, page IV).

.

1


ADMINISTRATIVE PERSONNEL POLICIES

Adopted: April 20, 2016

Effective: April 20, 2016

Expires: December 31, 2020

Revised December 14, 2016

2

TABLE OF CONTENTS

Introduction .................................................................................................................... 3

Coverage ........................................................................................................................ 3

Job Classifications ....................................................................................................... 4-8

Wages ............................................................................................................................ 8

Leaves of Absence ...................................................................................................... 8-9

Grievance Procedure ................................................................................................... 10

Equal Employment Opportunity .................................................................................... 11

Hiring Procedures ......................................................................................................... 11

Probationary Period ...................................................................................................... 11

Separation from Employment ....................................................................................... 12

Injuries and Accidents ............................................................................................. 12-13

Safety Policy ................................................................................................................ 13

Steel-Toed Safety Shoes .............................................................................................. 13

Romance In The Workplace……………………………………………………………….....13

Political Activity ............................................................................................................ 14

Sick Leave .................................................................................................................... 14

Vacation ....................................................................................................................... 15

Holidays ………………………………………………………………………………………..16

Longevity Pay Plan....................................................................................................... 16

Insurance ................................................................................................................ 17-18

Retirement Plan ........................................................................................................... 18

MERS Health Care Savings Plan (HCSP) ..................................................................... 18

Conferences & Seminars .............................................................................................. 19

Reimbursement for Mileage ......................................................................................... 19

Subject to Applicable Law ............................................................................................ 19

Equal Employment Opportunity Program ................................................................ 20-22

3

INTRODUCTION

The Wexford County Road Commission, by resolution adopted at a meeting on the 14th day of December, 2016, has adopted a revised uniform statement of personnel policies and practices which relate generally to all administrative employees of the Wexford County Road Commission. These policies and practices set forth the manner of obtaining employment with the Wexford County Road Commission, the conditions of that employment and the benefits that employees are entitled to receive as an employee. The many aspects of these practices and policies are set forth in some detail hereafter. All employees who are covered by these policies and practices will be given a copy of them. Employees should read and understand these policies and practices. Employees who have questions about any policy should speak to their supervisor. Some of the policies and practices set forth require action and behavior by employees. Most of the provisions set forth are merely a statement of the conditions which have existed for many years and have worked well during that period of time. The practices and policies relating to all employees will be the subject of continued review and from time to time may be amended by appropriate action. Employees will be notified of any changes.

COVERAGE

The following persons will not be covered by the "Administrative Personnel Policies": (a) Members of the Board of Road Commissioners, officers and employees specifically required by law to be appointees of the Board of Road Commissioners. (b) Independent contractors, including but not limited to lawyers, experts, arbitrators, etc. (c) All employees represented by a union and/or who are covered by a collective bargaining agreement. Only the following employees are covered by the "Administrative Personnel Policies": (a) Manager

(b) Finance and Business Manager

(c) Superintendent

(d) Assistant Superintendent

(e) Engineer

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(f) Administrative Assistant

JOB CLASSIFICATIONS

Job classifications have been established based upon analysis of the duties and responsibilities of the positions established and maintained in the various departments. The title for each job classification and a general description of the duties and responsibilities of each job classification are noted below. The descriptions for each position are meant to be illustrative and not completely exhaustive of all the duties and responsibilities an employee may be required to perform in any position. The Board of Road Commissioners may add to, modify, delete from, or revise such job descriptions in its sole discretion at any time. Manager The Manager shall be the chief administrative officer of the Wexford County Road Commission. The Manager will be expected to formulate recommendations in the areas requiring policy development and appropriate action by the Board of Road Commissioners. As chief administrator, the Manager shall regularly be expected to use discretionary authority implementing and administrating all policies, plans, and programs of the Road Commission. The Manager will report the status of maintenance, construction, snow and ice removal, equipment procurement and maintenance, personnel administration, employee relations programs, and annual budget as may be required by the Board of Road Commissioners. The Manager will be responsible for the direction of all employees, departments, and activities of the Road Commission which include finance, design, construction and maintenance of roads, and the equipment and buildings of the Road Commission. The Manager recommends policy and procedures to the Board of Road Commissioners and assures implementation of approved policy and procedures. The Manager will repre-sent the Road Commission to other governmental entities and public groups. The Manager will generate and/or respond to official correspondence affecting the Board's operations and/or business. The Manager shall have the authority to hire additional or replacement personnel, promote, layoff, discipline or terminate personnel and provide training and development of employees in accordance with Road Commission policies. The salary, wages, benefits and working conditions of all employees must have the concurrence of the Board of Road Commissioners.

5

The Manager is a salaried position which is exempt from the Fair Labor Standards Act overtime pay provisions. The Manager's responsibilities may require him/her to work hours in excess of the regular business hours of the Road Commission due to his required attendance at night meetings, weekend emergencies, etc. Finance and Business Manager The Finance and Business Manager shall be the Clerk and Secretary of the Board of Road Commissioners and shall be regarded as the chief financial officer of the Wexford County Road Commission. As chief financial officer, the Finance and Business Manager shall regularly be expected to use discretionary authority and independent judgment contained in approved policies, plans and programs of the Road Commission. The Finance and Business Manager will report directly to the Manager and shall be expected to work with the Manager in implementing and administrating all policies, plans, and programs of the Road Commission. The Finance and Business Manager shall be responsible for the preparation and presentation of the annual budget of the Road Commission, including any amendments during the year which may be necessary. The Finance and Business Manager shall also be charged with general supervision of the budget adopted by the Road Commission. The Finance and Business Manager is responsible for the direct supervision of the clerical staff. The Finance and Business Manager shall supervise or perform all accounting and bookkeeping operations of the Road Commission including financial statement preparation. The Finance and Business Manager will report to the Board of Road Commissioners his/her recommendations and implementation of such items as employee pension plans, various insurance policies, deferred compensations plans and any other matters that the Road Commission desires. The Finance and Business Manager is a salaried position which is exempt from the Fair Labor Standards Act overtime pay provisions. The Finance and Business Manager's responsibilities may require his/her to work hours in excess of the regular business hours of the Road Commission due to his/her required attendance at meetings, seasonal workload, etc.

Superintendent The Superintendent is responsible for the day to day operations of the Road Commission including direct supervision of the construction and maintenance of roads and equipment of the Road Commission. The Superintendent is responsible for the review, issuance, and follow up of standard driveway permits. The Superintendent will report directly to the Manager. The Superintendent will assign job duties on a daily

6

basis to all non-administrative employees and will assure the execution of those assign-ments. The Superintendent will also direct the Assistant Superintendent In dealing with the problems and complaints of the public and the employees of the Road Commission, the Superintendent shall use discretion and independent judgment in reaching cost-effective solutions. The Superintendent will consult with the Engineer and the Manager for solutions which are not easily determined. The Superintendent may be required to perform other duties as directed by the Manager. The Superintendent will be compensated at his/her regular hourly rate for additional duties outside normal work hours. The Superintendent is a salaried position which is exempt from the Fair Labor Standards Act overtime pay provisions. The Superintendent’s responsibilities may require him/her to work hours in excess of the regular business hours of the Road Commission due to seasonal work load, etc. Assistant Superintendent The Assistant Superintendent is responsible for the day to day operations of all shop activities including direct supervision of the mechanics and the care and maintenance of all equipment and buildings. This includes an aggressive preventive maintenance program and an active role in the selection of equipment, including parts and inventory. The Assistant Superintendent reports directly to the Manager. The Assistant Superintendent will assign job duties pertaining to the shop and equipment on a day to day basis. The Assistant Superintendent will be expected to perform mechanical work as needed in order to maintain, instruct, and address problems in an efficient manner. In dealing with the fabrication, repair or maintenance of equipment and the supervision of the employees of the Road Commission, the Assistant Superintendent shall use discretion and independent judgment in reaching cost effective solutions. The Assistant Superintendent will consult with the Superintendent and Manager for solutions which are not easily determined. The Assistant Superintendent may be required to perform other duties as directed by the Superintendent. The Assistant Superintendent will be compensated at his/her regular hourly rate for additional duties outside normal work hours.

7

The Assistant Superintendent is a salaried position which is exempt from the Fair Labor Standards Act overtime pay provisions. The Assistant Superintendent's responsibilities may require him to work hours in excess of the regular business hours of the Road Commission due to seasonal work load, etc. Engineer The Engineer shall report directly to the Manager. The Engineer will oversee the design and construction of the various construction projects throughout the year. The Engineer shall use discretion and independent judgment in reaching cost effective solutions to preserve and construct the roads and bridges of Wexford County. The Engineer will consult with the Manager for solutions which are not easily determined. The Engineer may also be responsible for the review, issuance and follow up of permits, including utility, construction, oversize and overweight vehicles and commercial driveway permits. The engineer is also responsible to interact with other governmental agencies to coordinate projects, secure project funding and / or permits necessary to complete the project. The Engineer will consult with the Superintendent to coordinate maintenance operations and equipment in order to compliment project development and preventative maintenance protecting the roadway investments. The Engineer may be required to perform other duties as directed by the Manager. The Engineer is a salaried position which is exempt from the Fair Labor Standards Act overtime pay provisions. The Engineer’s responsibilities may require him/her to work hours in excess of the regular business hours of the Road Commission due to his required attendance at meetings, seasonal work load, etc. Administrative Assistant The Administrative Assistant shall report to the Finance and Business Manager. He/she shall post the daily labor, equipment rental and material usage from the employee time sheets. The Administrative Assistant shall account for all employee accumulated sick and vacation leave earned and taken. All payroll checks, reports, month end billings, quarterly and year-end payroll reports will be prepared by the Administrative Assistant with approval of the Finance and Business Manager. Administrative Assistant will also assist the Manager, Superintendents, Finance and Business Manager, Engineer, and Assistant Superintendent as necessary. The Administrative Assistant shall answer the telephone, greet visitors and effectively deal with public complaints. Administrative Assistant will respond in a polite and professional manner and see that all messages get forwarded to the correct party.

8

The Administrative Assistant is responsible for maintaining and updating personnel records, including, but not limited to, paperwork required for new hires and retired or terminated employees, updating insurance and beneficiary information, and COBRA administration. Additional duties will include, but not be limited to, preparation of Road Commission correspondence and legal documents, filing and organization of files, and balancing the bank statements. The Administrative Assistant is a salaried position which is exempt from the Fair Labor Standards Act overtime pay provisions. Administrative Assistant may be required to work hours in excess of the regular business hours of the Road Commission due to required attendance at meetings, seasonal workload, etc.

WAGES

Each job classification shall be paid as established by the Board of Road Commissioners and receive pay adjustments accordingly. Employees will be paid biweekly (every other Thursday). The normal two-week payroll period begins on Sunday and ends on a Saturday, fourteen days later. Pay day is the Thursday following the Saturday the payroll period ends. If a salaried employee is not entitled to the full biweekly pay, the employee will be paid based on the number of hours worked. Prior to July 1 of each calendar year, the Board of Road Commissioners shall prepare a salary schedule showing the pay grades established for each administrative position. In the event an employee believes that he/she has not been assigned to the job pay grade based upon the duties and responsibilities performed he/she may request a meeting with his/her Department Supervisor to review his/her pay grade assignment.

LEAVE OF ABSENCE

Employees will be entitled to leaves of absence in accordance with the conditions set forth hereafter: Personal Leave of Absence: Employees with one (1) year or more of service may be granted a personal leave of absence without pay, subject to approval of the Manager, for an initial period of up to 10 scheduled work days per year without the loss of seniority, health insurance, vacation, sick leave, holidays or any other benefits available and accruing to the employee.

9

Personal leaves, once granted, may be extended by obtaining approval from the Board of Road Commissioners prior to the expiration of the original leave, for up to an additional thirty (30) calendar days. Extended personal leave granted shall be without pay and shall be subject to the following provisions:

a) Upon return from personal leave, the employee shall be reinstated at the same pay level and type of position as held at the time the leave was granted.

b) The employee may be required to submit to a physical and/or mental examination at the Road Commission's expense as a condition of returning to work at the conclusion of the leave.

c) The employee must keep his/her Supervisor informed of any change in status or any change in the conditions which caused the request for leave.

d) The employee must not engage in any gainful employment during such a leave. e) With the exception of the first ten (10) work days as stated in paragraph 1

previously, vacation time, holiday pay, sick leave, longevity pay, and other employee benefits, will not be accumulated or paid during a leave of absence. The employee's benefit status shall be frozen as of the date the leave commences and those benefits shall be reinstated upon the employee's return. Employees on an unpaid leave shall have their insurance premium paid for the additional thirty (30) calendar days only.

Military Leave: Employees who enter the Armed Forces of the United State while employed by the Road Commission shall be given all benefits accorded to them under applicable Federal Law.

Funeral Leave: An employee will be granted funeral leave without loss of pay for a period up to a maximum of three (3) scheduled work days upon the death of a member of the employee's immediate family. For application purposes, "immediate family" means: father, mother, sister, brother, child, spouse, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, step children, step parents, grandparents and grandchildren. Time spent on funeral leave shall be considered as time worked for purposes of these policies and practices and an employee's benefits status shall not be interrupted by reason of such funeral leave. Jury Duty Leave: If an employee is summoned and reports for jury duty prescribed by applicable law, such employee shall turn the jury duty fee over to the Road Commission (not mileage monies) and shall receive their regular wages for time spent on jury duty. Time spent on jury duty shall be considered as time worked for purposes of these policies and practices and an employee's benefits status shall not be interrupted by reason of such duty leave. Court Leave: An employee subpoenaed as a witness to testify in connection with any matters arising out of his/her employment with the Road Commission shall be granted time off for such testimony. Witness fees will be handled in the same manner as jury duty fees. (see item 4.)

10

GRIEVANCE PROCEDURE

The most effective accomplishment of work requires prompt consideration of an equitable adjustment of employee grievances. Therefore, the Road Commission administrative employees shall have grievance procedures as listed below. It is the desire of all parties to adjust grievances informally, and both supervisors and employees are expected to make every effort to resolve problems informally as they arise. However, it is recognized that there will be grievances which will be resolved only after a formal appeal and review. Accordingly, a grievance procedure is established. Any employee covered by these policies may register a grievance; however, such grievances are limited to interpretation or application of specific provisions of this administrative personnel policy manual. In the presentation of grievances, employees are assured of freedom from restraint, interference, discrimination or reprisal. Basic steps in the formal grievance procedure are as follows:

a) Within five (5) calendar days of the occurrence of the grievance, an employee must verbally discuss the grievance with his/her immediate supervisor. The employee must also request redress of the grievance.

b) If the redress is not granted, the employee then may file a written grievance appeal with his/her supervisor within ten (10) calendar days following the failure or refusal of the immediate supervisor to agree to the employee's oral request for redress of the grievance. The supervisor must render a decision in writing to the employee within ten (10) calendar days of receipt of the written grievance.

c) If redress is not granted, the aggrieved employee may appeal to the Manager. The written appeal must be filed within five (5) calendar days after receipt of the appeal. The Manager will issue his written decision to the employee within ten (10) calendar days.

d) If the employee is not satisfied with the decision of the Manager, the employee may appeal to the Board of County Road Commissioners. Such appeal must be in writing and submitted to Chairman of the Board of the County Road Commissioners within five calendar days of the employee's receipt of the written decision of the Manager. The Chairman of the Board of Road Commissioners shall then schedule a meeting between the employee, the Manager, and the Board of County Road Commissioners. Such a meeting shall be held in open or closed session as per the requirements of Public Act No. 267 of 1976 as amended. The employee and the Manager shall be allowed to present any evidence to the Board of County Road Commissioners for their consideration. The Board of County Road Commissioners, in their sole discretion, may require the attendance of any other party they feel may assist them in their consideration of the grievance. At the conclusion of the meeting, the Board of County Road Commissioners will render its decision to the employee and such decision shall be final and binding on all parties.

11

EQUAL EMPLOYMENT OPPORTUNITY The Wexford County Road Commission is an equal employment opportunity employer. Discrimination against any person in recruitment, examination, appointment, training, promotion, retention, discipline or any other aspect of personnel administration, because of political or religious opinions or affiliations or because of race, color, religion, gender, sexual orientation, gender identity or expression, national origin, age, genetic information, disability, or veteran status is prohibited except where specific age or physical requirements constitute a bona fide occupational qualification necessary to proper and efficient administration. Any employee who believes that he/she has been discriminated against in any of the manners set forth above may file an appeal under the grievance procedure.

HIRING PROCEDURES Whenever it is necessary for the Road Commission to hire a new employee, the hiring process shall be carried out through the Department Supervisor in accordance with the Equal Employment Opportunity policy manual adopted by the Road Commission as attached hereto.

PROBATIONARY PERIOD

All employees covered by these policies must complete a "new-hire probationary period" of twelve (12) months from the last date of hire with the Wexford County Road Commission. All present employees as of the effective date of these policies who have heretofore completed twelve (12) months of employment with the Road Commission shall be deemed to have satisfactorily completed the new hire probationary period except as otherwise provided herein. Probationary employees do not have any right or access to the grievance procedure as contained in these policies and may be laid off, disciplined, terminated, reassigned, or reclassified without reason or cause at the discretion of the Road Commission. Full-time probationary employees will receive all paid holidays occurring during their probationary period and shall further be entitled to receive only such other benefits as may be specifically stated in these policies, unless otherwise agreed to by the Board.

12

SEPARATION FROM EMPLOYMENT Employees covered by these policies and practices may be separated from employment and their rights may be fully terminated if:

a) The employee voluntarily quits or resigns. b) The employee retires or is retired under the Road Commission retirement plan. c) The employee is discharged for cause. d) The employee dies. e) The employee is permanently laid off for lack of work or lack of funds. f) The employee is absent for three (3) consecutive work days without notifying the

department head, or is absent for three (3) consecutive work days without a reason satisfactory to the Board of Road Commissioners for such absence.

g) The employee falsifies a material fact on an application for employment, or gives a false reason to obtain leave of absence.

h) The employee fails to report for work upon termination of a leave of absence unless such leave has been extended.

i) The employee who has been temporarily laid off fails to report to work within three (3) days after being notified to report from temporary layoff.

j) The employee is temporarily laid off for a period of twenty-four (24) consecutive months.

k) The employee engages in gainful employment while on any authorized leave of absence.

An employee separated from Road Commission employment pursuant to this policy shall have his or her personnel file marked with the reason for separation and the effective date of such separation. Separations pursuant to subparagraphs (c), (f), (g) and (l) shall be subject to appeal in accordance with the Grievance Procedures previously set forth.

INJURIES AND ACCIDENTS

a) An employee disabled due to a work-related injury which is compensable under the Worker's Compensation Act shall be granted a compensation leave of absence for the period of such disability and shall be entitled to receive the applicable worker's compensation benefits required by law. All insurances will be continued for a period of two (2) years from the date of disability. Sick pay and vacation leave shall not accumulate while off duty on Worker’s Compensation or Short Term Disability, and shall not be paid during such compensation leave. An employee may use sick days for the first seven (7) calendar days of absence.

An employee injured on the job during working hours or in any way related to employment shall report said injury as soon as possible to the department head, but in all events not later than the employee's next regularly scheduled work day. Such report

13

shall set forth the nature of the injury, the manner of its occurrence, the witnesses, if any, to the event, and such other details as may be required by the Road Commission and its worker's compensation insurer. The employee shall, where required, fill out an accident report in writing on forms to be furnished by the Road Commission and shall file the report with the Department Supervisor. In the event an employee is off work as a result of an on the job injury and reaches the maximum benefit set by the State of Michigan Workers’ Compensation Bureau, the Road Commission will reimburse the employee for the difference between the maximum benefit and the amount based on the employee’s wages, etc. as calculated by the workers’ compensation bureau. Employees shall report as soon as possible, but in any event not later than the end of their respective work shifts, all defects known to them in connection with any equipment used during the work shift. No employee shall use any defective equipment if it shall be unsafe to do so, and shall report as soon as possible, but not later than the end of the work shift, all such defects to the Department Supervisor.

SAFETY POLICY

The Road Commission has adopted a safety policy covering its operations, and its employees.

All employees are required to immediately bring to the attention of the Manager any unsanitary, hazardous, or dangerous equipment or conditions.

STEEL-TOED SAFETY SHOES

Any administrative employee of the Wexford County Road Commission that routinely work in safety sensitive areas will be reimbursed for steel-toed safety shoes up to two hundred dollars ($200) every two years. Reimbursement will be made only after providing a receipt and upon approval of the Department Supervisor.

Romance In the Workplace

Employee Relationships: In order to minimize the risk of conflicts of interest and promote fairness the Wexford County Road Commission maintains the following policy with respect to romance in the workplace for administrative employees : “ALL romantic or dating relationships between employees are prohibited” Violation of this policy shall result in discipline up to and including discharge

14

POLITICAL ACTIVITY

Every employee has the right to freely express his or her views as a citizen and to cast a vote as he or she may wish. Coercion for political purposes is strictly prohibited. No employee shall engage in any partisan political activity or campaigning for a non-partisan elective office during scheduled working hours. Solicitation of signatures or contributions or nominating petitions is prohibited during working hours. No employee shall be required to engage in the campaign for election of any candidate.

SICK LEAVE

Sick Leave is earned at the rate of 96 hours per year after three (3) consecutive months of employment, retroactive to the date of employment. The maximum number of hours that can be accumulated is capped at 1,000 hours. Any unused sick leave accumulated over the cap, at year end, shall be deposited at 75% of the current value into the employees HCSP

Retiring employees shall receive 75% of the current value of all unused sick leave upon retirement. An employee who voluntarily quits or is terminated shall be paid 50% of the current value of all unused sick leave.

Employees shall be allowed to utilize accumulated sick leave in the event of injury or illness or emergency circumstances which prevents them from performing their job responsibilities. Employees shall also be allowed to utilize accumulated sick leave for the purpose of taking personal time off work, for up to ninety-six (96) hours annually, provided such is approved in advance.

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VACATION

Vacations shall be provided after three (3) months of continuous employment, retroactive to the date of employment, as follows:

Years of Service Hours per Year

0 40

1 80

4 120

9 140

14 160

19 180

Employees may accumulate up to twice their annual vacation allowance. Up to forty (40) hours of unused vacation over this allowance may be deposited at 100% of the current value into the employee’s HCSP as MERS exempt wages.

Vacations will, so far as possible, be granted at the time most desired by the employee, but final right to allotment of vacation period is reserved to the employer in order to insure normal operation. Requests for vacation leave involving a week or more must be submitted to the immediate Supervisor at least ten (10) working days prior to the start of the requested vacation. An employee terminating employment, shall be paid 100% of all unused vacation leave.

No vacation shall be earned while an employee is on an unpaid leave of absence, (exception, Leave of Absence; Paragraph 1; Personal Leave of Absence) Short Term Disability, or Worker’s Compensation or when an employee is laid off from work.

No special vacation pay will be made, but checks will be issued as of the normal pay dates as they occur. Vacation pay shall be determined as of the employee's current salary at the time the vacation is taken. In order for an employee to qualify for vacation pay, the employee must be employed by the Road Commission on the first and last scheduled work day of the month, and must have worked or been on an approved paid leave of absence for at least fifteen (15) days in that month.

Vacation is accrued, but not earned, on January 1 each year. Any employee whose employment is terminated for any reason shall be paid vacation on a pro-rata basis. (Example: should an employee work five (5) months of the year, he would be paid five-twelfths [5/12] of the vacation pay he would normally be entitled to for that year). Any vacation paid that is unearned at termination will be reimbursed to the Wexford County Road Commission.

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HOLIDAYS

The Wexford County Board of Road Commissioners recognizes the following as holidays:

a) New Year's Day (January 1) b) Good Friday c) Memorial Day d) Independence Day (July 4) e) Labor Day f) Thanksgiving Day g) Friday after Thanksgiving Day h) Christmas Eve Day (December 24) i) Christmas Day (December 25)

Employees as covered by these policies will generally not be required to work on said holidays. However, employees may be required to work on said holidays if required by an emergency, inclement weather, or to assure efficient operation of the Road Commission. Whenever a designated holiday falls on a Sunday, and the day of observation is Monday, as required by applicable law, such Monday shall be considered the official holiday for the purpose of this provision. Whenever any of the designated holidays fall on Saturday, the preceding Friday shall be considered as the official holiday for the purpose of these provisions. Holidays that fall within employee's vacation period will be considered a holiday and not a vacation day.

LONGEVITY PAY PLAN In order to encourage employees to enter long-term employment with the Road Commission, a longevity plan is available to employees who meet each of the following eligibility requirements:

On attainment of five (5) years service as an employee for the Road Commission, employees shall receive an additional payment of ninety dollars ($90) over and above their regular pay, to be paid December 15th of each year. For each successive year of service, this payment shall increase by twenty dollars ($20) per year, until reaching fifteen (15) years of service at which time the payment will be three hundred dollars ($300.00) at fifteen (15) years of service, four hundred dollars ($400.00) at twenty (20) years of service, and five hundred dollars ($500.00) at twenty-five (25) years of service. Maximum annual payment of five hundred dollars ($500.00) shall continue to be paid each December 15th until he retires.

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INSURANCE

The Road Commission will maintain a comprehensive insurance program for the benefit of its employees (who have completed a thirty (30) calendar day new hire period) and, where applicable, dependents of such employees. The Insurance benefits include:

b) Health c) Dental d) Vision e) A group life insurance policy in the amount of thirty thousand dollars

($30,000.00). Said group life insurance policy shall contain a double indemnity clause.

f) A Short-term Disability plan, after twelve (12) months of employment, as follows: Benefit will pay 66 2/3% of normal earnings with a maximum weekly benefit of five hundred dollars ($500.00). Employees will become eligible for standard benefits on the 8th day (retroactive to the 1st day) in the event of an accident that prevents an employee from working, and on the 8th day (not retroactive) in the event of illness. The benefit will be for a maximum of twenty-six (26) weeks from original date of accident or illness. Employees will be allowed to use accumulated vacation/sick leave to make up the difference between the maximum plan benefit and their full salary amount.

Employees who are unable to work due to an off-the-job injury or illness shall have their insurance premiums paid by the Employer while they are on Short Term Disability, to a maximum of four (4) months.

Employees who have alternative health care coverage available to them, and provide proof to the Employer, may opt out of the Employer’s health care plan and receive four hundred dollars ($400.00) per month instead of said insurance. An employee should be permitted to opt back in to the Employer’s plan during annual open enrollment or if alternative coverage is lost during the year. Effective July 1, 2006, retirees will pay fifty dollars ($50.00) per month toward the cost of their health insurance. The employer agrees to provide the Health Insurance Plan and Preferred RX plan to a retired employee only after reaching the age of sixty-two (62), except as provided as follows: Effective January 1, 2012, employees shall earn 4.0% per year toward the Employer’s payment of an eligible retiree’s health care to be paid at age sixty (60). When an employee reaches the age of sixty-five (65) and is eligible for the available supplemental medical insurance, the Employer shall pay the cost of such supplemental insurance for the employee only. Any employee hired after July 6,2010 shall not have employer paid health insurance after retirement but may participate in the employer’s health care plan for the employee and dependents at his/her own cost.

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Effective March 1, 2016 (in accordance with the OPEB buyout) the Employer shall no longer provide a retiree Health Insurance Plan. 1. The OPEB buyout applies to current employees hired before July 6, 2010 and

retiring after March 1, 2016. 2. The OPEB buyout will be based on 8% of total career earnings through 2015 per the

schedule provided to the Administrative group. 3. The OPEB buyout will be paid out over four (4) years or less. 4. The OPEB shall be paid to the individual employee’s HCSP account. 5. Upon separation of service, including death, the payout schedule remains intact.

RETIREMENT PLAN The Wexford County Road Commission will maintain a retirement plan for the administrative employees with the Municipal Employees' Retirement System. The plan adopted as July 18, 2001 is Benefit Program B-4, with Early Retirement Option F-55 with twenty-five (25) years of service, the E-2 and RS50% riders. The employees will pay 2% of their gross wage toward the cost of the E2 rider, with that cost being deducted from their pay. All new hires after August 1, 2010 shall be enrolled in the MERS Hybrid Defined Benefit and Defined Contribution plan only with a 1.0% pension multiplier and an employer matching contribution to the defined contribution plan of up to 3.0%.

MERS HEALTH CARE SAVINGS PLAN (HCSP) The Wexford County Road Commission is a Participating Employer in the MERS Health Care Savings Plan. In accordance with the MERS HCSP Plan Documents and IRS rules, every administrative employee is eligible to participate in the HCSP as of his/her date of hire with the Road Commission.

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CONFERENCES AND SEMINARS

Attendance at educational seminars must be approved by the Department Supervisor prior to attendance for all employees. Reimbursement will be made as follows: 1. All registration and tuition costs. 2. Actual lodging costs. 3. Reasonable travel expenses. 4. Meals

a) Breakfast b) Lunch c) Dinner

REIMBURSEMENT FOR MILEAGE In the event an employee covered by these policies and practices is required to use the employee's own automobile in connection with the performance of duties on behalf of the Road Commission and/or travel to or from required conferences or seminars that need reimbursement only for travel, such employee shall be reimbursed for such use at a mileage rate established by the Internal Revenue Service. Each employee shall be required to keep accurate records of the number of miles such car is used, which records shall include the date of use, the place or places visited, the persons contacted at each such place and the purpose of such trip. No employee will be entitled to mileage under this provision unless the employee has been authorized to use the employee's personal car for Road Commission business by the Department Supervisor

SUBJECT TO APPLICABLE LAW

These policies and practices are subject to all applicable provisions of federal and state law. If any of these policies or practices, or any part thereof, are found to be in conflict with provisions of applicable law, they shall be void but all other unaffected portions of these policies and practices shall remain in full force and effect.

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EQUAL EMPLOYMENT OPPORTUNITY PROGRAM


I-STATEMENT OF POLICY The Wexford County Road Commission is an Equal Employment Opportunity Employer. Discrimination against any person in recruitment, examination, appointment, training, promotion, retention or discipline or any other aspect of personnel administration, because of political or religious opinions or affiliations or because of race, color, religion, gender, sexual orientation, gender identity or expression, national origin, age, genetic information, disability, or veteran status is prohibited except where specific age or physical requirements constitute a bona fide occupational qualification necessary to proper and efficient administration.

II-RESPONSIBILITY FOR THE PROGRAM Alan D. Cooper, Manager, is designated by the employer as the Equal Employment Opportunity (EEO) Officer and is entrusted with the responsibility of overseeing the program. He is given full authority to carry out the program and is given the responsibility to:

a) Assist in collecting and analyzing employment data, identify problem areas, set affirmative action goals and timetables, and develop programs to achieve these goals. Establish specific remedies to eliminate any discriminatory practices.

b) Maintain records and monitor internal audit and reporting systems to measure program effectiveness to determine where progress has been made and where further action is needed.

c) Report to the Commission on progress in relation to achieving Commission goals. d) Serve as a liaison between the Road Commission and other community groups

and governmental agencies.

III-DISSEMINATION OF POLICY All employees of the Road Commission staff who are authorized to hire, supervise, promote and discharge employees, or who give advice or recommendation in regards to such action, will be made fully aware of and will implement the Commission's Equal Employment Opportunity policy and contractual responsibility. To insure such, the Road Commission will, at a minimum, take the following action:

a) Periodic meetings of supervisory and personnel staff will be conducted not less than once every six months, at which time the Road Commission's Equal Employment Opportunity policy and its implementation will be reviewed, explained and reaffirmed.

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b) All new supervisory or personnel employees will be given a thorough indoctrination covering all major aspects of the Road Commission's Equal Employment Opportunity policy within thirty days of their reporting duty.

c) All Road Commission personnel involved in the direct recruitment of employees will be made aware of the methods followed by the Road Commission in locating and hiring minority, disadvantaged, and female employees and will be kept appraised of any affirmative action goals and timetables.

d) An Equal Employment Opportunity notice will be posted in locations visible to all applicants for employment as well as current employees.

e) The Road Commission will maintain a working environment free of harassment, intimidation, and coercion at all sites and in all facilities which Road Commission employees are assigned to work. The Road Commission shall specifically insure that all foremen, superintendents and other on-site supervisory personnel are aware of and carry out the Commission's obligations and maintain such a working environment with specific attention to minorities and women working at such sites or in such facilities.

f) Each employee of the Road Commission will receive a copy of the Road Commission's Equal Employment Opportunity program.

IV-RECRUITMENT

a) Job applications will be accepted at all times and will be kept on file for one (1)

year. b) When advertising for employees, the Road Commission will include in all

advertisements the notation, "An Equal Opportunity Employer." The Commission will place all such advertisements in newspapers, and other publications having a large circulation among minority and female groups in the area from which the Road Commission's work force would normally be derived.

c) The Road Commission will contact, in writing, the Michigan Employment Security Commission when seeking qualified minorities and women applicants.

V-AFFIRMATIVE ACTION GOAL

The Road Commission will make a good faith effort to meet the designated goals as established by the Office of Federal Contract Compliance Programs. These goals will be established as they relate to the utilization of minorities and women in all job categories within the Road Commission.

VI-TRAINING AND PROMOTION

a) The Road Commission will advise all employees of available training programs and entrance requirements for each job category.

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b) The Commission will periodically review the training and promotion potential of minority and female group employees and will encourage eligible employees to apply for such training and promotions.

VII-PERSONNEL ACTIONS

The Road Commission will review its policies and practices, taking specific steps to insure that wages, working conditions, and employee benefits, including hiring, upgrading, promotion, transfer, demotion, layoff and termination will be taken without regard to race, color, religion, sex or national origin. The Road Commission shall maintain a working environment that is free of harassment, intimidation, and coercion at all sites and in all facilities. The following procedures will be followed:

a) Periodic inspection of project sites will be conducted to insure that working conditions and employee facilities do not allow discriminatory treatment of project site personnel.

b) The spread of wages paid within each job classification will be periodically evaluated to determine any evidence of discriminatory wage practice.

c) The Commission will periodically review selected personnel actions in depth to determine whether there is evidence of discrimination. Where evidence is found, the Commission will promptly take corrective action.

d) Any discrimination or civil rights complaints should be filed by the EEO officer for investigation and corrective action. The Commission will investigate all such complaints and will take appropriate corrective action if necessary. If the investigation indicates that the discrimination may affect persons other than the complainant, such corrective action shall include such other persons. Upon completion of each investigation, the Commission will inform every complainant of all avenues of appeal.

VIII-DISADVANTAGED, MINORITY AND WOMEN-OWNED BUSINESS ENTERPRISES

Using the M.D.O.T. Directory of Certified Firms, local D.B.E.-M.B.E.-W.B.E. companies will be placed on the currently used list when soliciting bids. BOARD APPROVED - November 2, 2005 G:\Policies\Administrative Personnel Policies

WEXFORD COUNTY

ROAD COMMISSION Boon, Michigan

FINANCIAL STATEMENTS

WITH OTHER SUPPLEMENTARY INFORMATION

December 31, 2017


TABLE OF CONTENTS PAGE Independent Auditors' Report………………………………………………………………………. 1

Management’s Discussion and Analysis……………………..……………………………………… 4

Basic Financial Statements

Statement of Net Position……………………………………………………………………………. 11 Statement of Activities……………………………………………………………………………… 12 Balance Sheet……………………………………………………………………………………….. 13 Reconciliation of the Balance Sheet Fund Balance to the Statement of Net Position………………. 14 Statement of Revenues, Expenditures, and Change in Fund Balance……………………………. 15 Reconciliation of the Statement of Revenues, Expenditures, and Change in Fund Balance of Governmental Funds to the Statement of Activities………………………………………….. 16 Notes to the Financial Statements………………………………………………………………….. 18

Required Supplementary Information:

Schedule of Changes in Road Commission’s Net Pension Liability and Related Ratios …………… 36 Schedule of Road Commission Pension Contributions – Defined Benefit Plan…….….…………… 37 Schedule of Other Postemployment Benefits Obligation…………………………………………..... 38 Budgetary Comparison Schedule………………………………………………………….………… 39

Other Supplementary Information: Analysis of Change in Fund Balance……………………………………………………………….. 42 Analysis of Revenues……………………………….………………………………………………. 43 Analysis of Expenditures…………………………………………………………………………… 44

INDEPENDENT AUDITORS' REPORT

To the Honorable Chairman and Members of County Road Commission County of Wexford Boon, Michigan

We have audited the accompanying financial statements of the governmental activities and major fund of Wexford County Road Commission, a component unit of Wexford County, Michigan, as of and for the year ended December 31, 2017, and the related notes to the financial statements, which collectively comprise the Road Commission’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and major fund of Wexford County Road Commission as of December 31, 2017, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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To the Honorable Chairman and Members of County Road Commission County of Wexford Boon, Michigan

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis (pages 4 through 9), schedule of changes in net pension liability and related ratios (page 36), schedule of pension contributions (page 37), schedule of other postemployment benefits obligation (page 38) and budgetary comparison information (pages 39 and 40) be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Wexford County Road Commission’s basic financial statements. The other supplementary information as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements.

The other supplementary information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the other supplemental information is fairly stated in all material respects in relation to the basic financial statements as a whole.

Saginaw, Michigan March 16, 2018

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MANAGEMENT’S DISCUSSION AND ANALYSIS



December 31, 2017

USING THIS ANNUAL REPORT

The Wexford County Road Commission’s discussion and analysis is designed to: a) assist the reader in focusing on significant financial issues; b) provide an overview of the Road Commission’s financial activity; c) identify changes in the Road Commission’s financial position (its ability to address the next and subsequent year challenges); d) identify any material deviation from the approved budget; and e) identify any issues or concerns.

OVERVIEW OF THE FINANCIAL STATEMENTS

This annual report consists of four parts; management’s discussion and analysis (this section), the basic financial statements, required supplementary information, and an additional section that presents the operating fund broken down between primary, local and county road funds. The basic financial statements include two kinds of statements that present different views of the Road Commission.

The first two statements are government-wide financial statements that provide both long-term and short-term information about the Road Commission’s overall financial status. These statements report information about the Road Commission as a whole, using accounting methods similar to those used by private-sector companies. The Statement of Net Position (previously called Statement of Net Assets) includes all of the government’s assets and liabilities. All of the current year’s revenues and expenses are accounted for in the Statement of Activities regardless of when the cash is received or paid. The two government-wide statements report the Road Commission’s net position and how they have changed.

The unfunded OPEB actuarially accrued liability (UAAL), in accordance with accounting principles generally accepted in the United States of America, are not included in the statement of net position. The Other Postemployment Benefit plan information is included in Note 6 to the Financial Statements.

The remaining statements are fund financial statements that focus on the individual funds, reporting the operations in more detail than the government-wide financial statements.

REPORTING THE ROAD COMMISSION AS A WHOLE

The Statement of Net Position and the Statement of Activities report information about the Road Commission, as a whole, and about its activities in a way that helps answer the question of whether the Road Commission, as a whole, is better off or worse off as a result of the year’s activities. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting method used by most private-sector companies. All of the year’s revenues and expenses are taken into account regardless of when cash is received or paid.

The two statements mentioned above, report the Road Commission’s net position and changes in it. The reader can think of the Road Commission’s net position (the difference between assets and liabilities) as one way to measure the Road Commission’s financial health or financial position. Over time, increases and decreases in the Road Commission’s net position are one indicator of whether its financial health is improving or deteriorating.

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December 31, 2017

REPORT ON THE COMMISSION’S MAJOR FUND

The fund financial statements begin on page 13 and provide detailed information about the major fund. The Road Commission currently has one fund, the County Road Fund, in which all of the Road Commission’s activities are accounted. The County Road Fund is a governmental type fund.

Governmental Fund:

The governmental fund focuses on how money flows into and out of this fund and the balances that are left at year end that are available for spending. This fund is reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the Road Commission’s general governmental operations and the basic service it provides. Governmental fund information helps the reader determine whether there are more or fewer financial resources that can be spent in the near future to finance the Road Commission’s services. We describe the relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and the governmental fund in a reconciliation following the fund financial statements.

THE ROAD COMMISSION AS A WHOLE

The Road Commission’s net position increased $981,701 from $36,808,662 to $37,790,363 for the year ended December 31, 2017. The net position and change in net position are summarized below.

The balance in unrestricted net position changed from a deficit of $1,158,842 at December 31, 2016 to a surplus of $189,419 at December 31, 2017. The net investment in capital assets decreased $366,560 during the year. This decrease reflects expenses and disposals associated with capital assets greater than the investment in new capital assets.

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December 31, 2017

CONDENSED FINANCIAL STATEMENTS

The following are condensed government-wide financial statements as of December 31, 2017 and 2016, and for the years then ended, for Wexford County Road Commission.

CONDENSED STATEMENT OF NET POSITION

2017 2016

ASSETS:

Current and other assets 3,863,972$ 3,587,003$

Capital assets, net 37,600,944 37,967,504

Total assets 41,464,916 41,554,507

DEFERRED OUTFLOWS OF RESOURCES 2,185,729 2,986,362

LIABILITIES:

Current liabilities 1,105,140 1,031,327

Long-term liabilities 4,755,142 6,578,094

Total liabilities 5,860,282 7,609,421

DEFERRED INFLOWS OF RESOURCES - 122,786

NET POSITON:

Net investment in capital assets 37,600,944 37,967,504

Unrestricted (deficit) 189,419 (1,158,842)

Total net position 37,790,363$ 36,808,662$

December 31,

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December 31, 2017

CONDENSED STATEMENT OF ACTIVITIES

2017 2016

REVENUES:

Program Revenues:

Charges for services 2,344,533$ 2,008,867$

Operating grants and contributions 5,929,954 4,644,369

Capital grants and contributions 113,881 748,435

8,388,368 7,401,671

General Revenues:

Interest and rents 1,388 2,735

Refunds and other 119,732 125,599

121,120 128,334

Total revenues 8,509,488 7,530,005

EXPENSES:

Public works 7,582,650 7,621,582

Excess (deficiency) of revenues over (under) expenses

before other items 926,838 (91,577)

OTHER ITEMS:

Gain (loss) on equipment disposals 54,863 104,798

Total other items 54,863 104,798

Change in net position 981,701 13,221

Net position, beginning of year 36,808,662 36,795,441

Net position, end of year 37,790,363$ 36,808,662$

Year Ended December 31,

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December 31, 2017

THE ROAD COMMISSION’S FUND

The Road Commission’s County Road Fund is used to control the expenditures of Michigan Transportation Fund monies, distributed to the county, which are earmarked by law for road and highway purposes.

For the year ended December 31, 2017, the fund balance of the Road Fund decreased $77,093.

Management believes that the Net Position balance provides sufficient working capital to support future operations of Wexford County Road Commission.

BUDGET

The Wexford County Road Commission’s budget is prepared in accordance with state law using the modified accrual accounting basis. This is the same accounting basis used for the governmental fund.

ORIGINAL BUDGET VERSUS AMENDED BUDGET:

The 2017 budget was adopted in December 2016. The budget is reviewed periodically and amended as information becomes available or management’s plans change. The budgeted revenue was (amended) increased by approximately $1,422,198 during the year. The increase was derived primarily from the accounting for increased State funding.

Total budgeted expenditures increased from the original budget to the amended budget by approximately $1,903,676. The majority of this increase was due to expenses related to additional road work.

AMENDED BUDGET VERSUS ACTUAL:

In accordance with the Budget Resolution adopted by the Road Commission in December 2017, the Finance and Business Manager has modified the budget to various revenue and expenditures accounts which cannot be accurately projected prior to year end. As a result, the Final Adopted Budget of the Wexford County Road Commission has been amended to equal the actual revenue, expenditures, and fund balance for the year ended December 31, 2017.

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December 31, 2017

CAPITAL ASSETS AND LONG-TERM DEBT

CAPITAL ASSETS:

The Commission reports capital assets for full accrual accounting purposes, net of accumulated depreciation, in the amount of $37,600,944. This information, which includes infrastructure, in comparison to the previous year, is summarized below:

2017 2016

Land 438,198$ 34,795$

Land and improvements - infrastructure 7,888,248 7,888,248

Land and improvements - depreciable 152,312 152,312

Depletable assets 70,392 70,392

Buildings 5,048,268 5,048,268

Road equipment 8,704,831 8,790,092

Shop equipment 693,040 673,091

Engineers equipment 17,251 18,760

Office equipment 66,101 66,132

Infrastructure 42,962,429 47,037,771

Total capital assets 66,041,070 69,779,861

Accumulated depreciation 28,440,126 31,812,357

Net capital assets 37,600,944$ 37,967,504$

December 31,

Additional information regarding capital assets is located in Note 4 in the Notes to the Financial Statements.

LONG-TERM DEBT:

The Road Commission currently has no long-term bonds or equipment purchase contracts payable.

OTHER

Management is not aware of any currently known facts, decisions, or conditions expected to have a significant effect on Wexford County Road Commission’s financial condition next year and beyond.

CONTACTING THE ROAD COMMISSION’S FINANCIAL MANAGEMENT

This financial report is designed to provide the motoring public, citizens and other interested parties a general overview of the Road Commission’s finances and to show accountability for the money it receives. If you have any questions about this report or need additional financial information, contact the Wexford County Road Commission administrative offices at 85 W. Highway M-15, Boon, MI 49618.

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BASIC FINANCIAL STATEMENTS


STATEMENT OF NET POSITION

December 31, 2017

ASSETS:

Cash and Cash Equivalents 1,645,318$

Accounts Receivable:

Motor vehicle highway funds 834,083

State trunkline maintenance 266,784

State Transportation Department - Other 7,779

County road agreements 20,104

Sundry accounts receivable 237,027

Inventories:

Equipment materials and parts 273,325

Road materials 579,552

Capital Assets:

Assets not being depreciated 8,326,446

Assets being depreciated, net 29,274,498

Total assets 41,464,916

DEFERRED OUTFLOWS OF RESOURCES

Pension 2,185,729

LIABILITIES:

Current Liabilities:

Accounts payable 284,086

Accrued payroll and compensated absences 378,140

Unearned revenue 95,914

Deposits Payable 1,000

Current portion of OPEB buyout agreement payable 346,000

Long-term Liabilities:

Advances payable 364,800

Net OPEB obligation 231,668

Net pension liability 4,158,674

Total liabilities 5,860,282

NET POSITION:

Net investment in capital assets 37,600,944

Unrestricted 189,419

Total net position 37,790,363$

The accompanying notes are an integral part of these financial statements.

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STATEMENT OF ACTIVITIES

Year Ended December 31, 2017

PROGRAM EXPENSES:

Public works 7,582,650

PROGRAM REVENUES:

Charges for services 2,344,533

Operating grants and contributions 5,929,954

Capital grants and contributions 113,881

Total program revenues 8,388,368

Net program revenues 805,718

GENERAL REVENUES:

Interest and rents 1,388

Refunds and other 119,732

Total general revenues 121,120

Excess (deficiency) of revenues over (under) expenses

before other items 926,838

OTHER ITEMS:

Gain (loss) on equipment disposals 54,863

Change in net position 981,701

Net position, beginning of year 36,808,662

Net position, end of year 37,790,363$


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COUNTY ROAD FUND

GOVERNMENTAL FUND BALANCE SHEET

December 31, 2017

ASSETS:

Cash and cash equivalents 1,645,318$

Accounts receivable:

Motor vehicle highway funds 834,083

State trunkline maintenance 266,784

State Transportation Department - Other 7,779

County road agreements 20,104

Sundry accounts receivable 237,027

Inventories:

Equipment materials and parts 273,325

Road materials 579,552

Total assets 3,863,972$

LIABILITIES:

Current Liabilities:

Accounts payable 284,086$

Accrued payroll and compensated absences 378,140

Advances payable 364,800

Deposits payable 1,000

Unearned revenue 95,914

Total liabilities 1,123,940

FUND BALANCE:

Nonspendable - inventories 852,877

Unassigned 1,887,155

Total fund balance 2,740,032

Total liabilities and fund balance 3,863,972$


-13-


RECONCILIATION OF THE BALANCE SHEET FUND BALANCE

TO THE STATEMENT OF NET POSITION

December 31, 2017

Governmental fund balance 2,740,032$

Net position reported for governmental activities in the statement of net

position is different because:

Capital assets used in governmental activities are not financial resources

and therefore are not reported in the governmental fund.

Capital assets not being depreciated 8,326,446

Capital assets being depreciated, net 29,274,498

Deferred pension outflows are not reported in the governmental fund.

Differences in projected and actual investment earnings of the pension plan 327,925

Differences between expected and actual experience 32,512

Changes in assumptions 201,672

Contributions made after the measurement date 1,623,620

Long-term liabilities are not due and payable in the current year and

therefore are not reported in the governmental fund.

OPEB buyout agreement payable (346,000)

Net OPEB obligation (231,668)

Net pension liability (4,158,674)

Net position of governmental activities 37,790,363$


-14-


COUNTY ROAD FUND

GOVERNMENTAL FUND STATEMENT OF REVENUES,

EXPENDITURES,

AND CHANGE IN FUND BALANCE


REVENUES:

Licenses and permits 23,295$

Federal grants 113,881

State grants 5,929,954

Contributions from local units 255,217

Charges for services 2,066,021

Interest and rents 1,388

Other revenue 119,732

Total revenues 8,509,488

EXPENDITURES:

Public works 6,308,644

Capital outlay 2,183,109

Total expenditures 8,491,753

Excess (deficiency) of revenues over (under) expenditures 17,735

OTHER FINANCING SOURCES (USES):

Sale of capital assets 59,358

Change in fund balance 77,093

Fund balance, beginning of year 2,662,939

Fund balance, end of year 2,740,032$


-15-


RECONCILIATION OF THE STATEMENT OF REVENUES,

EXPENDITURES, AND CHANGE IN FUND BALANCE OF

GOVERNMENTAL FUND TO THE STATEMENT OF ACTIVITIES


Change in fund balance of governmental fund 77,093$

Change in net position reported for governmental activities in the statement

of activities is different because:

Governmental funds report capital outlays as expenditures. However, in the

statement of activities, the cost of those assets is depreciated over their

estimated useful lives and reported as depreciation expense.

Purchase of capital assets 2,586,512

Depreciation expense (2,948,577)

Governmental funds report the proceeds from the sale of capital asset as revenue.

However, in the statement of activities, the proceeds are reduced by the

depreciated cost of those assets.

Depreciated cost of assets sold (4,495)

Some expenses reported in the statement of activities do not require the use

of current financial resources and therefore are not reported as expenditures

in governmental funds.

Change in OPEB buyout agreement payable 500,000

Change in net OPEB obligation 26,086

Change in net pension liability and related deferred outflows of resources 745,082

Change in net position of governmental activities 981,701$


-16-

NOTES TO FINANCIAL STATEMENTS



December 31, 2017

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

The accounting policies of the Wexford County Road Commission conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to government units. The following is a summary of the significant accounting policies used by the Wexford County Road Commission.

A. REPORTING ENTITY

The Wexford County Road Commission is an independent governmental agency operated under the jurisdiction of the State of Michigan and Wexford County established pursuant to the County Road Law MCL 224.1. The Commission is charged with the responsibility of maintaining all primary and local road systems in Wexford County. The Road Commission is governed by a five member board appointed by the County Board of Commissioners.

In accordance with generally accepted governmental accounting principles, the Wexford County Road Commission is considered a component unit of Wexford County for financial reporting purposes. The Road Commission is considered to be a component unit of the County because it is an entity for which the County is considered to be financially accountable. The Road Commission, as a component unit of the County, is required by Public Act 51 of the State of Michigan to have a separate audit performed of its operations. These audited financial statements have been prepared to meet this State requirement.

The Road Commission Operating Fund (County Road Fund) is used to control the expenditures of Michigan Transportation Fund moneys distributed to the County, which are earmarked by law for street and highway purposes. The Board of County Road Commissioners is responsible for the administration of the County Road Fund. The Road Commission may not issue debt without the County’s approval and property tax levies are subject to County Board of Commissioners’ approval.

B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

The government-wide financial statements (i.e. the Statement of Net Position and the Statement of Activities) report information on all of the activities of the Wexford County Road Commission. The Road Commission consists of only governmental activities; no business type activities.

The Statement of Net Position presents the Road Commission’s assets and liabilities with the difference being reported as either net investment in capital assets or unrestricted net position.

The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: (1) charges to customers of applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment; and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Other items not properly included among program revenues are reported instead as general revenue.

Separate financial statements are provided for the County Road Fund (governmental fund). The County Road Fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions.

-18-



December 31, 2017

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES, continued

C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT

PRESENTATION

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenue is recorded when earned and expenses are recorded when the liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met.

Amounts reported as program revenue include: charges to customers or applicants for goods or services or privileges provided, Michigan Transportation Funds (MTF), State and Federal contracts, contributions from local units and others.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenue is recognized as soon as it is both measurable and available. Revenue is considered to be available if it is collected within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within sixty days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims, and judgments are recorded only when the payment is due.

Michigan transportation funds, grants, permits, township contributions, charges for services and sales, and interest associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenue of the current fiscal period. All other items are considered to be available only when cash is received.

D. ASSETS, LIABILITIES, DEFERRED OUTFLOWS/INFLOWS, AND NET POSITION/FUND

BALANCE

Cash and Cash Equivalents:

The Road Commission's cash and cash equivalents are considered to be cash on hand, demand deposits including certificates of deposit, and short-term investments with original maturities of three months or less from date of acquisition.

State statutes authorize the Road Commission to invest in U.S. government obligations, certificates of deposit, commercial paper, repurchase agreements, banker’s acceptances, and with some restrictions, mutual funds.

All investments, if any, are stated at fair value.

Inventories:

Inventory, consisting of various operating parts, supplies and road material is stated at cost, as determined on the average unit cost method. Inventory items are charged to road construction and maintenance, equipment repairs and operations as they are used.

-19-



December 31, 2017


Capital Assets:

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g. roads, bridges, and similar items) are reported in the government-wide financial statements. The Wexford County Road Commission defines capital assets as assets with an initial individual cost of more than $1,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost of purchase or constructed. Donated capital assets are recorded at estimated fair value at the date of donation.

GASB No. 34 requires major networks and major subsystems of infrastructure assets acquired, donated, constructed, or substantially rehabilitated since fiscal years ending after June 30, 1980 be inventoried and capitalized. The Wexford County Road Commission has retroactively capitalized all of its assets as required effective January 1, 2003.

Deferred Outflows of Resources:

In addition to assets, the statement of net position may report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net position by the government that is applicable to a future reporting period.

Depreciation and Depletion:

Depreciation has been computed over the assets estimated useful lives using the sum-of-the-years-digits method for road equipment and the straight-line method for all other assets. The depreciation rates are designed to amortize the cost of the assets over their estimated useful lives as follows:

Buildings 10 to 50 years Road Equipment 5 to 8 years Shop Equipment 10 years Engineering Department 10 years Office Equipment 5 to 10 years Infrastructure – Roads 5 to 20 years Infrastructure – Bridges 25 to 50 years

Depletion is determined by allocating the purchase cost to the total years available. As materials are used, the proportionate share of cost is charged to depletion.

Long-Term Obligations:

In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the Statement of Net Position.

Compensated Absences (Vacation and Sick Leave):

The total accumulated unpaid vacation and sick pay liability of the Road Commission at December 31, 2017, was determined to be a current liability and is therefore reflected as a current liability on the fund and government-wide statements. -20-



December 31, 2017


Other Postemployment Benefits Costs:

The Road Commission offers health insurance and prescription coverage to qualified retirees. The Road Commission uses an actuarial valuation to compute the annual required contribution (ARC) necessary to fund the obligation over a thirty year amortization period. In the governmental funds, OPEB costs are recognized when benefits are paid. For the government-wide statements the Road Commission reports the full accrual cost which is equal to the current year required contribution, adjusted for interest and “adjustment to the ARC”, if any, on the beginning of year underpaid amount.

Deferred Inflows of Resources:

In addition to liabilities, the statement of net position may report a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net position by the government that is applicable to a future reporting period.

Fund Balance:

In the fund financial statements, fund balance may be presented in five possible categories, each of which identifies the extent to which the Road Commission is bound to honor constraints on the specific purpose for which amounts can be spent:

Nonspendable – amounts which cannot be spent because they are either not in spendable form or are legally or contractually required to be maintained intact.

Restricted – amounts that have constraints placed on their use by an external party or constitutional provisions or enabling legislation (grants, contributions, specific fee mandates).

Committed – amounts that are committed for specific purposes by the Commission, as the Road Commission’s highest level of decision-making authority, pursuant to constraints imposed by formal actions taken, such as majority vote or resolution. These committed amounts cannot be used for any other purpose unless the Road Commission removes or changes the specific use through the same type of formal action taken to establish the commitment.

Assigned – amounts that are constrained by the Road Commission’s intent to be used for specific purposes but are neither restricted nor committed.

Unassigned – amounts that are available for any purpose.

When the Road Commission incurs expenditures for purposes for which various fund balance classifications can be used, it is the Road Commission’s policy to use the restricted fund balance first.

Snow Removal Revenue:

Snow removal revenue was allocated 100% to local roads. This allocation is in accordance with provisions made by the State Highway Department allowing each Road Commission to make its own allocation of total snow removal revenue.

-21-



December 31, 2017


Interest Income Allocation:

Interest income for the year was allocated 100% to County Road Commission Funds based on beginning fund balance allocated to each sub-account.

Use of Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.

NOTE 2 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

A. BUDGET COMPLIANCE

Public Act 2 of 1968, as amended, requires budget amendments as needed to prevent actual expenditures from exceeding those provided for in the budget. For the year ended December 31, 2017 the Road Commission incurred no expenditures in excess of budget appropriations.

B. BUDGET AND BUDGETARY ACCOUNTING

The Road Commission follows these procedures in establishing the budget as reflected in these financial statements:

1. In December the Finance and Business Manager submits, to the Commission, a proposed operating budget for the year commencing on January 1.

2. Prior to December 31, the budget is legally enacted through passage of a resolution. 3. For purposes of meeting emergency needs of the Road Commission, transfer of appropriations

may be made by the authorization of the Finance and Business Manager. Such transfers of appropriations must be approved by the Commission at its next regularly scheduled meeting.

4. The Finance and Business Manager is charged with general supervision of the budget. 5. During the year the budget is monitored and amendments to the budget resolution are made as

deemed necessary. 6. The budgets are adopted on a basis consistent with generally accepted accounting principles

(GAAP).

-22-



December 31, 2017

NOTE 3 – CASH AND CASH EQUIVALENTS

Deposits are carried at cost. Deposits of the County Road Fund are in four banks in the name of the Road

Commission and the County Treasurer. Michigan Compiled Laws, Section 129.91, authorizes the Road Commission to deposit and invest in the accounts of federally insured banks, credit unions, and savings and loan associations; bonds, securities and other obligations of the United States, or any agency or instrumentality of the United States; United States government or federal agency obligation repurchase agreements; banker’s acceptance of United States banks; mutual funds composed of investment vehicles which are legal for direct investment by local units of government in Michigan; commercial paper rated within the two highest classifications, which mature not more than 270 days after the date of purchase, and which involves no more than 50% of any one fund; and obligations of the State of Michigan or its political subdivisions which are rated as investment grade. Financial institutions eligible for deposit of public funds must maintain an office in Michigan. The Road Commission has adopted the County’s investment policy, which is in accordance with the provisions of Public Act 20 of 1943, as amended.

At year end the Road Commission did not have any investments; all the cash deposits and $400 in petty cash were reported as Cash and Equivalents in the basic financial statements.

The Road Commission's deposits are subject to custodial credit risk for deposits, which is the risk that in the event of a bank failure, the Road Commission’s deposits may not be returned to it. The Road Commission does not have a deposit policy for custodial credit risk. At year end, the Road Commission had $1,720,571 of bank and credit union deposits (checking, money market savings accounts, and certificates of deposit), of which $750,007 was covered by federal depository insurance and the remainder was uninsured and uncollateralized.

-23-



December 31, 2017

NOTE 4 – CAPITAL ASSETS

Capital asset activity of the Wexford County Road Commission for the current year was as follows:

Balance Balance

January 1, December 31,

2017 Additions Deductions 2017

Capital assets not being depreciated

Land 34,795$ 403,403$ -$ 438,198$

Land and Improvements-Infrastructure 7,888,248 - - 7,888,248

Subtotal capital assets not being depreciated 7,923,043 403,403 - 8,326,446

Capital assets being depreciated

Land Improvements 152,312 - - 152,312

Depletable Assets 70,392 - - 70,392

Buildings 5,048,268 - - 5,048,268

Road Equipment 8,790,092 467,398 (552,659) 8,704,831

Shop Equipment 673,091 32,383 (12,434) 693,040

Engineers Equipment 18,760 - (1,509) 17,251

Office Equipment 66,132 1,675 (1,706) 66,101

Infrastructure - Roads & Bridges 47,037,771 1,681,653 (5,756,995) 42,962,429

Subtotal capital assets being depreciated 61,856,818 2,183,109 (6,325,303) 57,714,624

Less accumulated depreciation:

Land Improvements 134,944 5,066 - 140,010

Depletable Assets 70,392 - - 70,392

Buildings 1,864,375 110,612 - 1,974,987

Road Equipment 7,749,471 467,253 (552,206) 7,664,518

Shop Equipment 379,213 55,116 (9,281) 425,048

Engineers Equipment 16,432 707 (1,132) 16,007

Office Equipment 35,332 7,586 (1,194) 41,724

Infrastructure 21,562,198 2,302,237 (5,756,995) 18,107,440

Total accumulated depreciation 31,812,357 2,948,577 (6,320,808) 28,440,126

Total capital assets being depreciated, net 30,044,461 (765,468) (4,495) 29,274,498

Governmental activities, capital assets, net 37,967,504$ (362,065)$ (4,495)$ 37,600,944$

-24-



December 31, 2017

NOTE 4 – CAPITAL ASSETS, continued

Non-infrastructure depreciation expense for the year was charged to programs of the Wexford County Road Commission as follows:

Public Works:

Primary Road:

Maintenance 149,197$

Local Road:

Preservation 5,717

Maintenance 329,813

State Trunkline Maintenance 156,320

Administrative Expense 5,293

Total non-infrastructure depreciation expense 646,340$

NOTE 5 – LONG-TERM LIABILITIES FOR COMPENSATED ABSENCES AND OPEB

AGREEMENT

The following is a summary of the long-term liability transactions for the compensated absences and OPEB agreement for the year ended December 31, 2017:

Due

January 1, December 31, Within

2017 Additions (Reductions) 2017 One Year

Compensated absences payable 276,025$ 142,719$ (116,988)$ 301,756$ 301,756$

OPEB buyout agreement payable 846,000 - (500,000) 346,000 346,000

Total Governmental Activities 1,122,025$ 142,719$ (616,988)$ 647,756$ 647,756$

NOTE 6 – EMPLOYEE RETIREMENT AND BENEFIT SYSTEMS

Pensions – For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, if any, and pension expense, information about the fiduciary net position of the Municipal Employees Retirement System (MERS) of Michigan and additions to/deductions from MERS’ fiduciary net position have been determined on the same basis as they are reported by MERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

-25-



December 31, 2017

NOTE 6 – EMPLOYEE RETIREMENT AND BENEFIT SYSTEMS, continued

Plan Description – The employer’s defined benefit pension plan provides certain retirement, disability and death benefits to plan members and beneficiaries. The employer participates in the Municipal Employees Retirement System (MERS) of Michigan.

MERS is an agent multiple-employer, statewide public employee pension plan established by the Michigan Legislature under Public Act 135 of 1945 and administered by a nine member Retirement Board. MERS issues a publicly available financial report that includes financial statements and required supplementary information. This report may be obtained accessing the MERS website at www.mersofmich.com.

Benefits Provided – The following are the benefits provided from the December 31, 2016 valuation. Two of the four divisions are closed to new hires.

General - Closed Admin - Closed

Benefit Multiplier: 2.50% Multiplier (80% max) 2.50% Multiplier (80% max)

Normal Retirement Age: 60 60

Vesting: 10 years 10 years

Early Retirement (Unreduced): 55/25 55/25

Early Retirement (Reduced): 50/25 50/25

55/15 55/15

Final Average Compensation: 5 years 5 years

Member Contributions: 4% 2%

Act 88: Yes Yes

General - Open Admin - Open

Benefit Multiplier: Hybrid Plan - 1% Multiplier Hybrid Plan - 1% Multiplier

Normal Retirement Age: 60 60

Vesting: 6 years 6 years

Early Retirement (Unreduced): - -

Early Retirement (Reduced): - -

- -

Final Average Compensation: 3 years 3 years

Member Contributions: 0% 0%

Act 88: Yes Yes

Employees covered by benefit terms – At the December 31, 2016 valuation date, the following employees were covered by the benefit terms:

Inactive employees or beneficiaries currently receiving benefits: 44

Inactive employees entitled to but not yet receiving benefits: 13

Active employees: 26

Total 83

-26-

http://www.mersofmich.com/



December 31, 2017


Contributions – The employer is required to contribute amounts at least equal to the actuarially determined rate, as established by the MERS Retirement Board. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The employer may establish contribution rates to be paid by its covered employees.

Employer required contributions for the current fiscal year averaged approximately $32,965 monthly based on valuation payroll as of the December 31, 2015 valuation. Contributions by division ranged from $55 monthly to $21,108 monthly.

Net Pension Liability – The employer’s net pension liability was measured as of December 31, 2016, and the total pension liability used to calculate the net pension liability was determined by an annual actuarial valuation as of that date.

Actuarial assumptions – The total pension liability in the December 31, 2016 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation: 2.5%; Salary Increases: 3.75% in the long-term; Investment rate of return: 7.75%, net of investment and administrative expenses including inflation.

Although no specific price inflation assumptions are needed for the valuation, the 2.5% long-term wage inflation assumption would be consistent with a price inflation of 3%-4%. Mortality rates used were based on the RP-2014 Group Annuity Mortality Table of a 50% Male and 50% Female blend.

The actuarial assumptions used in the December 31, 2016 valuation were based on the results of the most recent actuarial experience study of 2009-2013.

The long-term expected rate of return on pension plan investments was determined using a model method in which the best-estimate ranges of expected future real rates of return (expected returns, net of investment and administrative expenses and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation.

The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:

Asset Class Target Allocation Long-Term Expected Real

Rate of Return

Global Equity 57.5% 5.02%

Global Fixed Income 20.0% 2.18%

Real Assets 12.5% 4.23%

Diversifying Strategies 10.0% 6.56%

-27-



December 31, 2017


Discount rate – The discount rate used to measure the total pension liability is 8.00%. The projection of cash flows used to determine the discount rate assumes that Commission and employee contributions will be made at the rates agreed upon for employees and the actuarially determined rates for the Commission. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to pay all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Changes in net pension liability during the measurement year were as follows:

Total Plan Net

Pension Fiduciary Pension

Liability Net Position Liability

Balances at December 31, 2015 13,361,398$ 7,779,795$ 5,581,603$

Service cost 153,625 - 153,625

Interest on total pension liability 1,046,688 - 1,046,688

Difference between expected and actual experience - - -

Changes in assumptions 187,810 - 187,810

Employer contributions - 1,887,869 (1,887,869)

Employee contributions - 37,737 (37,737)

Net investment income (loss) 903,291 (903,291)

Benefit payments, including employee refunds (709,228) (709,228) -

Administrative expenses - (17,845) 17,845

Other changes - - -

Net changes 678,895 2,101,824 (1,422,929)

Balances at December 31, 2016 14,040,293$ 9,881,619$ 4,158,674$

Increase (Decrease)

Sensitivity of the net pension liability to changes in the discount rate – The following presents the net pension liability of the employer, calculated using the discount rate of 8.00%, as well as what the employer’s net pension liability would be using a discount rate that is 1% lower (7.00%) or 1% higher (9.00%) than the current rate.

1% Decrease Current 1% Increase

Rate 7.00% Rate 8.00% Rate 9.00%

Net pension liability 5,845,811$ 4,158,674$ 2,739,923$

-28-



December 31, 2017


Pension Expense and Deferred Outflows and Deferred Inflows of Resources Related to Pensions – For the year ended December 31, 2017; the employer recognized pension expense of $878,538. The employer reported deferred outflows of resources related to pensions from the following sources:

Deferred

Outflows of

Resources

Differences in experiences 32,512$

Differences in assumptions 201,672

Net difference between projected and actual earnings

on pension plan investments 327,925

Contributions subsequent to the measurement date 1,623,620

2,185,729$

The above amount reported as deferred outflows of resources resulting from contributions subsequent to the measurement date will be recognized as a reduction in the net pension liability for the year ending December 31, 2018.

Amounts reported as deferred outflows and inflows of resources related to pensions, attributable to the differences in experiences, differences in assumptions, and differences between projected and actual earnings in the 2016 measurement year, will be recognized in pension expense as follows:

Year

Ended Amount

2018 368,442$

2019 134,258

2020 106,002

2021 (46,593)

Pension Plan Fiduciary Net Position – Detailed information about the plan’s fiduciary net position is available in the separately issued financial report found at www.mersofmichigan.com. The plan’s fiduciary net position has been determined on the same basis used by the plan. The plan uses the economic resources measurement focus and the full accrual basis of accounting. Investments are stated at fair value. Contribution revenue is recorded as contributions are due, pursuant to legal requirements. Benefit payments and refunds of employee contributions are recognized as expense when due and payable in accordance with the benefit terms.

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December 31, 2017


Postemployment Benefits Other Than Pensions (OPEB):

Plan Description – The Road Commission makes available health care benefits and prescription coverage to all retired employees, hired prior to July 6, 2010, who meet certain criteria identified in the funding policy. The benefits are offered under a single employer defined benefit plan administered by the Road Commission. The benefits were offered under the collective bargaining agreement for union employees and employment agreements between the Board of Commissioners and nonunion employees. In March 2016, the Road Commission reached a settlement with all eligible, active employees to release the Commission of future obligations under these agreements. In exchange, the Commission agreed to make contributions to the employee’s Health Care Savings Plan. Details of this settlement are discussed further in the defined contribution plan description found below.

Funding Policy – The benefits were provided under negotiation with the Road Commission's competitive bargaining unit and personnel policy. The Road Commission is paying for health insurance for the retired employees who were hired before July 6, 2010, and retired prior to March 1, 2016 only. Health insurance coverage for spouses and/or family members is paid for by the retired employee. The prescription coverage is self-funded with a 10/20/40 deductible plan.

The Road Commission has no obligation to make contributions in advance of when the insurance premiums and prescription coverage are due for payment (in other words, this may be financed on a pay-as-you-go basis). Therefore, the Road Commission has elected not to fund the plan in advance.

Annual Other Postemployment Benefit Cost – The Road Commission’s annual other postemployment benefit (OPEB) cost is calculated based upon the annual required contribution (ARC) of the employer, an amount actuarially determined based on the entry age normal cost method. Under the entry age normal cost method, the total employer contribution is comprised of the normal cost required to amortize the unfunded actuarial accrued liability over 30 years. The employer normal cost is, for each employee, the level percentage of payroll contribution (from entry age to retirement) required to accumulate sufficient assets at the member's retirement to pay for his projected benefit. The Road Commission’s annual OPEB cost for the year was $36,690. No advance funding contributions were made to the plan during the year ended December 31, 2017. The plan has sixteen (16) total members (or their beneficiaries) currently receiving benefits. During 2017, the Road Commission paid $62,776 for health insurance premiums and prescriptions for its retirees under this program.

Actuarial Methods and Assumptions – Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of 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 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. In future years, the schedule of funding progress will present multiyear trend information about whether the actuarial value of assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

-30-



December 31, 2017


Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and the plan members to that point. The 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, consistent with the long-term perspective of the calculations.

In the January 1, 2017 calculation, the entry age actuarial cost method was used. The actuarial assumptions included a 4 percent investment rate of return. The UAAL, for purposes of calculating the annual required contribution (ARC), is being amortized as a level percent of payroll over 30 years.

Annual Required Contribution Funding

The computed contribution and actual funding for the year ended December 31, 2017 is summarized as follows:

Annual required contribution (recommended) 26,380$

Interest on the prior year's net OPEB obligation 10,310

Less adjustment to the annual required contribution -

Annual OPEB cost 36,690

Amounts contributed:

Payments of current premiums (62,776)

Increase (decrease) in net OPEB obligation (26,086)

Net OPEB obligation, beginning of year 257,754

Net OPEB obligation, end of year 231,668$

The annual OPEB cost, the contribution, the percentage contributed to the plan, and the net OPEB obligation for the current and two preceding years were as follows:

Actuarial Annual Net

Year Valuation OPEB Percentage OPEB

Ending Date Cost Contribution Contributed Obligation

12/31/17 12/31/16 36,690$ 62,776$ 171% 231,668$

12/31/16 12/31/16 (867,501) 67,998$ -8% 257,754

12/31/15 12/31/14 250,476 65,564 26% 1,193,253

Funding Progress – As of December 31, 2016, which is the most recent actuarial valuation, the actuarial accrued liability for benefits was $621,287, all of which was unfunded. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits.

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December 31, 2017


Defined Contribution Plan The Commission provides a Health Care Savings Plan (“HCSP”) through MERS, which provides health insurance benefits to qualified employees in retirement. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. The benefits were offered under the collective bargaining agreement for union employees and employment agreements between the Board of Commissioners and nonunion employees. The Commission contributes the equivalent of 1% of gross (before-tax) pay to each eligible union employee’s individual account. Nonunion employees have the opportunity to convert unused, accumulated vacation and sick leave into contributions to their individual HCSP accounts. Sick leave accumulated over the 1,000 hour cap may be deposited at 75% of current value and up to forty vacation hours accumulated over the cap of twice their annual allowance may be deposited at 100% of current value. Contributions to the plan during the year totaled $9,493 for union employees and $0 for nonunion employees.

During the year, the Commission reached a settlement with all active employees hired before July 6, 2010, and not yet retired by March 1, 2016, who would be eligible to receive benefits upon retirement under the OPEB plan described above. The settlement released the Commission of future obligations to these eligible employees under the OPEB plan. In exchange, the Commision agreed to make contributions to each employee’s individual HCSP account equal to 8% of the historical wages that employee had earned as of December 31, 2015. In total, the buyout amounted to $1,346,000, to be paid over three years, $1,000,000 of which has been paid as of December 31, 2017.

Deferred Compensation Plans:

The employees of the Road Commission are allowed to contribute on a voluntary basis to deferred compensation plan through payroll deductions. The plan is made available to all eligible employees by authority of Section 457 of the Internal Revenue Code (IRC), and is administered by Morgan Stanley and Empower. Employees may set aside and invest portions of their current income to meet their financial requirements and supplement their retirement and social security benefits. The Road Commission does not contribute to the Plan.

During the year ended December 31, 1999, the Road Commission adopted GASB Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. The Road Commission has placed all Deferred Compensation Plan assets with trustees, relinquishing all fiduciary accountability for the assets. Accordingly, the related assets and liabilities of the plan are not reported in the Road Commission's financial statements.

NOTE 7 – EQUIPMENT AND TRUNKLINE MAINTENANCE ADVANCE

The State of Michigan has advanced funds to the Wexford County Road Commission for the purchase of equipment and for trunkline maintenance. Each advance is an annual advance with appropriate adjustments made each year to reflect the current balance based on applicable formula developed by the Michigan Department of Transportation. Because the transaction is an annual advance, the transaction is classified as a liability in the Special Revenue Fund, rather than an item included in Long-Term Debt, in accordance with the instructions of the Local Audit Division of the Michigan Department of Treasury.

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December 31, 2017

NOTE 8 – UNEARNED REVENUE

Governmental funds report unearned revenue in connection with amounts received but not yet earned. At the end of the current year, unearned revenue was as follow:

Unearned

State Grants - Forest Roads 95,914$

NOTE 9 – FEDERAL GRANTS

The Michigan Department of Transportation (MDOT) requires that road commissions report all Federal and State grants pertaining to their county. During the year ended December 31, 2017, the Federal grants received and expended by the Road Commission was $125,186 for contracted projects and $0 for negotiated projects. Contracted projects are defined as projects performed by private contractors paid for and administrated by MDOT. Negotiated projects are projects where the Road Commission administers the grant and either performs the work or contracts it out. The Road Commission would be subject to single audit requirements if they expended $750,000 or more for negotiated projects.

NOTE 10 – RISK MANAGEMENT

The Road Commission is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets; errors and omissions, injuries to employees, employee health insurance and natural disasters. The Road Commission manages its liability and property risk by participating in Michigan County Road Commission Self Insurance Pool and the County Road Association Self Insurance Fund (for workers compensation). These insurance providers are public entity risk pools providing coverage to its members. The Road Commission pays an annual premium to these providers for its insurance coverage. These providers are self-sustaining through member premiums and provide, subject to certain deductibles, occurrence-based casualty coverage for each incident and occurrence based on property coverage to its members by internally assuring certain risks and reinsuring risks through commercial companies. Various deductibles are maintained to place responsibility for small charges with the insured. The Road Commission manages its retiree health insurance coverage with a policy through Benistar/Hartford, and its current union and administrative employee coverage with a policy with BCBS. An employee prescription drug plan is provided by a BCBS policy using a 15/30/60 deductible plan. Settled claims resulting from these risks have not exceeded insurance coverage in any of the past three fiscal years.

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December 31, 2017

NOTE 11 – CONTINGENCIES

The Wexford County Road Commission contracts with the State of Michigan to perform state highway maintenance functions for the State. The cost of the maintenance is then billed to the State of Michigan who reimburses the Wexford County Road Commission for the costs incurred. These cost reimbursement contract expenditures are subject to audit at some future date by the State of Michigan. The amount, if any, of expenditures that may be disallowed by the State of Michigan cannot be determined until the State completes its annual audit of its maintenance agreement with the Wexford County Road Commission. The audit adjustment is accounted for as an adjustment of the current year’s expenditures.

The Wexford County Road Commission is party to various legal proceedings incidental to its operations. Certain claims, suits and complaints arising in the ordinary course of operations have been filed against the Road Commission. In the opinion of management and legal counsel, all such matters are adequately covered by insurance or, if not so covered, are without merit or are in a very preliminary state, and it is not possible to currently assess the probability of an unfavorable outcome.

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REQUIRED SUPPLEMENTARY INFORMATION


SCHEDULE OF CHANGES IN THE ROAD COMMISSION’S NET

PENSION LIABILITY AND RELATED RATIOS Last Three Years (Ultimately ten years will be displayed)

2016 2015 2014

Total pension liability

Service cost 153,625$ 140,567$ 155,499$

Interest on total pension liability 1,046,688 1,007,392 971,964

Difference between expected and actual experience 187,810 (184,178) -

Changes in assumptions - 605,015 -

Benefit payments, including employee refunds (709,228) (695,831) (685,334)

Net change in total pension liability 678,895 872,965 442,129

Total pension liability - beginning 13,361,398 12,488,433 12,046,304

Total pension liability - ending 14,040,293$ 13,361,398$ 12,488,433$

Plan fiduciary net position

Contributions - employer 1,887,869$ 842,556$ 617,084$

Contributions - employee 37,737 36,106 39,632

Net investment income (loss) 903,291 (118,222) 460,525

Benefit payments, including employee refunds (709,228) (695,831) (685,334)

Administrative expenses (17,845) (17,175) (16,947)

Net change in plan fiduciary net position 2,101,824 47,434 414,960

Total plan fiduciary net position - beginning 7,779,795 7,732,361 7,317,401

Total plan fiduciary net position - ending 9,881,619$ 7,779,795$ 7,732,361$

Road Commission's net pension liability 4,158,674$ 5,581,603$ 4,756,072$

Plan fiduciary net position as a percentage of the total pension liability 70.38% 58.23% 61.92%

Covered employee payroll 1,294,335$ 1,203,777$ 1,276,992$

Road Commission's net pension liability as a percentage of covered payroll 321.30% 463.67% 372.44%

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SCHEDULE OF ROAD COMMISSION PENSION CONTRIBUTIONS –

DEFINED BENEFIT PLAN

Last Ten Years

2017 2016 2015 2014 2013

Actuarially determined contribution 395,574$ 412,499$ 413,007$ 402,464$ 382,459$

Contributions in relation to the actuarially

determined contribution 1,623,620 1,887,869 842,556 617,085 588,914

Contribution (excess) deficiency (1,228,046)$ (1,475,370)$ (429,549)$ (214,621)$ (206,455)$

Covered-employee payroll 1,294,335$ 1,203,777$ 1,276,992$ 1,353,914$ 1,312,879$

Actuarially determined contribution as a

percentage of covered-employee payroll 31% 34% 32% 30% 29%

2012 2011 2010 2009 2008

Actuarially determined contribution 365,925$ 338,132$ 345,448$ 341,937$ 339,364$

Contributions in relation to the actuarially

determined contribution 379,285 338,132 345,448 341,937 339,364

Contribution (excess) deficiency (13,360)$ -$ -$ -$ -$

Covered-employee payroll 1,313,400$ 1,467,599$ 1,556,551$ 1,592,217$ 1,545,559$

Actuarially determined contribution as a

percentage of covered-employee payroll 28% 23% 22% 21% 22%

Notes to Schedule

Valuation date: Actuarially determined contribution rates are calculated as of December 31

each year, 24 months prior to the beginning of the fiscal year in which

contributions are required.

Methods and assumptions used to determine contribution rates from the December 31, 2016 valuation:

Actuarial cost method Entry age

Amortization method Level percentage of payroll, open and closed

Remaining amortization period 22 years

Asset valuation method 5-year smoothed market

Inflation 2.5%

Salary increases 3.75% in the long-term

Investment rate of return 7.75%, net of investment and administrative expense including inflation

Retirement age 55-70 years of age depending on years of service credited

Mortality RP-2014 Group Annuity Mortality Table of 50% Male - 50% Female blend

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SCHEDULE OF OTHER POSTEMPLOYMENT BENEFITS OBLIGATION

December 31, 2017

Actuarial Valuation Date 12/31/16 12/31/14 12/31/11

Actuarial Value of Assets -$ -$ -$

Actuarial Accrued Liability (AAL) 621,287 2,842,739 2,898,909

Unfunded AAL (UAAL) 621,287 2,842,739 2,898,909

Funded Ratio 0% 0% 0%

Covered Payroll N/A N/A N/A

UAAL as a percentage of covered payroll N/A N/A N/A

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COUNTY ROAD FUND

BUDGETARY COMPARISON SCHEDULE


Actual

Over (Under)

Original Final Actual Final Budget

Revenues:

Licenses and Permits

Permits 16,880$ 23,295$ 23,295$ -$

Federal Aid

Surface Transportation Program - - - -

Other - 113,881 113,881 -

State Aid

Michigan Transportation Fund

Engineering 10,000 10,000 10,000 -

Urban Roads 292,620 315,406 315,406 -

Primary Allocation Roads 2,895,232 3,127,940 3,127,940 -

Local Allocation Roads 2,047,314 2,213,496 2,213,496 -

Snow Removal 170,919 173,112 173,112 -

Economic Development Funds

Rural Primary "D" Funds - - - -

Forest Road 90,000 90,000 90,000 -

Contributions from Local Units

Townships - 255,217 255,217 -

Charges for Services

State Trunkline Maintenance 1,177,891 1,872,230 1,872,230 -

State Trunkline Non-Maintenance 311,267 98,019 98,019 -

Salvage Sales 2,334 2,891 2,891 -

Other sales 103,985 92,881 92,881 -

Interest and Rents

Interest 3,206 1,388 1,388 -

Other Revenue

Contributions 25,000 20,996 20,996 -

Gain on sale of assets - 59,358 59,358 -

Other - 98,736 98,736 -

Total Revenues 7,146,648 8,568,846 8,568,846 -

continued

Budgeted Amounts

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COUNTY ROAD FUND

BUDGETARY COMPARISON SCHEDULE, continued


Actual

Over (Under)

Original Final Actual Final Budget

Expenditures:

Public Works

Primary Road

Preservation 800,000 808,893 808,893 -

Maintenance 1,158,877 1,494,559 1,494,559 -

Local Road

Preservation 200,000 840,831 840,831 -

Maintenance 2,322,207 2,479,559 2,479,559 -

State Trunkline Maintenance 1,177,891 1,591,813 1,591,813 -

State Trunkline Non-Maintenance 311,267 98,019 98,019 -

Equipment Expense - Net - 85,805 85,805 -

Administrative Expense - Net 746,927 833,755 833,755 -

Capital Outlay - Net (129,092) 258,519 258,519 -

Total expenditures 6,588,077 8,491,753 8,491,753 -

Change in fund balance 558,571 77,093 77,093 -

Fund balance, beginning of year 3,801,329 2,662,939 2,662,939 -

Fund balance, end of year 4,359,900$ 2,740,032$ 2,740,032$ -$

Budgeted Amounts

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OTHER SUPPLEMENTARY INFORMATION


COUNTY ROAD FUND

ANALYSIS OF CHANGE IN FUND BALANCE


County

Primary Local Road

Road Road Commission

Funds Funds Funds Total

Total revenues 3,377,101$ 2,921,951$ 2,269,794$ 8,568,846$

Total expenditures 2,664,754 3,857,193 1,969,806 8,491,753

Excess (deficiency) of revenues over

(under) expenditures 712,347 (935,242) 299,988 77,093

Other financing sources (uses):

Optional transfers in (out) (712,347) 712,347 - -

Total other financing sources (uses) (712,347) 712,347 - -

Excess (deficiency) of revenues and other

sources over (under) expenditures and

other uses - (222,895) 299,988 77,093

Fund balance, beginning of year - - 2,662,939 2,662,939

Interfund transfer - 222,895 (222,895) -

Fund balance, end of year -$ -$ 2,740,032$ 2,740,032$

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COUNTY ROAD FUND

ANALYSIS OF REVENUES


County

Primary Local Road



REVENUES:

Licenses and Permits:

Permits -$ -$ 23,295$ 23,295$

Federal Aid:

Other - 113,881 - 113,881

State Aid:

Michigan Transportation Funds:

Engineering 5,856 4,144 - 10,000

Snow removal - 173,112 - 173,112

Urban road 243,305 72,101 - 315,406

Allocation 3,127,940 2,213,496 - 5,341,436

Economic Development Funds:

Forest road - 90,000 - 90,000

Contributions from Local Units:

County raised funds:

Township contributions - 255,217 - 255,217

Charges for Services:

Trunkline maintenance - - 1,872,230 1,872,230

State trunkline non-maintenance - - 98,019 98,019

Salvage sales - - 2,891 2,891

Other - - 92,881 92,881

Interest and Rents:

Interest earned - - 1,388 1,388

Other Revenue:

Contributions - - 20,996 20,996

Gain (loss) on sale of assets - - 59,358 59,358

Other - - 98,736 98,736

Total revenues 3,377,101$ 2,921,951$ 2,269,794$ 8,568,846$

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COUNTY ROAD FUND

ANALYSIS OF EXPENDITURES


County

Primary Local Road



EXPENDITURES:

Public Works:

Preservation - Structural Improvements:

Roads 808,893$ 651,971$ -$ 1,460,864$

Other - 188,860 - 188,860

Maintenance:

Roads 704,490 1,949,815 - 2,654,305

Winter maintenance 659,352 474,424 - 1,133,776

Traffic control 130,717 55,320 - 186,037

Other:

Trunkline maintenance - - 1,591,813 1,591,813

Trunkline non-maintenance - - 98,019 98,019

Administrative expense 341,495 492,260 - 833,755

Equipment expense, net 19,807 44,543 21,455 85,805

Capital Outlay:

Capital outlay, net - - 258,519 258,519

Total expenditures 2,664,754$ 3,857,193$ 1,969,806$ 8,491,753$

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