Finance Highlights 2008 0729 - Laserfiche WebLink

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r CITY OF SAN LEANDRO MEMORANDUM DATE: June 24, 2008 TO: Finance Committee FROM: Perry Carter, Interim Finance Director /~' SUBJECT: Recommendations regarding the City's Retiree Medical Benefit RECOMMENDATION Finance Committee approval of staffs recommendations to allow staff to make a final selection of a Trustee for the City's "Retiree Medical" post employment benefit plan (Cal PERS or PARS), and secondly, authorize the use of a portion of funds set aside for the City's retiree medical plan to transition from a "pay as you go basis" to a pre-paid or actuarially determined annual contribution for the City's retiree medical benefit. DISCUSSION GASB 95 In 2004 the Government Accounting Standards Board (GASB) issued Statement No. 45, Accounting and Financial Reporting by Employers for Post-Employment Benefits Other than Pension, generally referred to as OPEB or the OPEB obligation. GASB 45 requires public agencies, including the City to report costs and obligations for post-employment health care and other post-employment benefits much like the current requirement to report pension obligations. GASB 45 applies to the City of San Leandro, as the City provides post-retirement medical and dental benefits to all employee groups through the age of 65 as required by current labor and management agreements. San Leandro will be required to report in accordance with GASB 45 starting with fiscal year 2008-09. It is important to note that GASB 45 does not require the City fund its OPEB obligation in any particular manner. However, regardless of the funding approach, GASB 45 does require an actuarial study and disclosure of the City's actuarial unfunded liability, if any and the Annual Required Contribution or ARC for any OPEB obligations. The actuarial unfunded liability noted above considers such factors as the current retiree pool, current employees that are "earning" the benefit to be received in the future and potential growth in the pool of eligible retirees. The ARC is the amount required to fund both "current" costs and retire the unfunded liability over a specified time.