BOROUGH OF SOMERVILLE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2022 AND 2021
Note 8: POST-RETIREMENT HEALTH COVERAGE (CONT’D)
Contributing Employers 590
Contributing Nonemployers 1

Nonspecial Funding Situation – The State of New Jersey’s Total OPEB Liability for nonspecial funding situation was $16,090,925,144 at June 30, 2022.

Components of Net OPEB Liability – The components of the collective net OPEB liability for Local Government Retired Employees Plan, including the State of New Jersey, is as follows:

June 30, 2022
Total OPEB Liability $16,090,925,144
Plan Fiduciary Net Position 58,670,334
Net OPEB Liability $16,149,595,478
Plan fiduciary net position as a percentage
of the total OPEB liability
0.36%

Actuarial Assumptions and Other Inputs:

The total OPEB liability as of June 30, 2022 was determined by an actuarial valuation as of July 1, 2021, which was rolled forward to June 30, 2022. The actuarial assumptions vary for each plan member depending on the pension plan the member is enrolled in. This actuarial valuation used the following actuarial assumptions, applied to all periods in the measurement:

Salary Increases*:
Public Employees’ Retirement System (PERS)
Rate for all future years
2.75% to 6.55%
based on years of service
Police and Firemen's Retirement System (PFRS)
Rate for all future years
3.25% to 16.25%
based on years of service

* Salary increases are based on years of service within the respective plan.

Mortality rates were based on the Pub-2010 General classification headcount weighted mortality with fully generational mortality improvement projections from the central year using Scale MP-2021.

Actuarial assumptions used in the July 1, 2021 valuation were based on the results of the PFRS and PERS experience studies prepared for July 1, 2018 to June 30, 2021.

100% of active members are considered to participate in the Plan upon retirement.

Discount Rate:
The discount rate for June 30, 2022 was 3.54%. This represents the municipal bond return rate as chosen by the State. The source is the Bond Buyer Go 20-Bond Municipal Bond Index, which includes tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher. As the long-term rate of return is less than the municipal bond rate, it is not considered in the calculation of the discount rate, rather the discount rate is set at the municipal bond rate.

57