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City of San Leandro Notes to Basic Financial Statements For the year ended June 30, 2010 NOTE 15 —OTHER POST EMPLOYMENT BENEFITS The City implemented the provisions of GASB 45. Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, in fiscal year 2009-10. This Statement establishes uniform financial reporting standards for employers providing postemployment benefits other than pension. The provisions of this Statement are applied prospectively and do not affect prior financial statements. Required disclosures are presented below. A. Plan Description The City's defined benefit Other Post Employment Benefit (OPEB) Plan, which was established by City Council in fiscal year 2008-09 in accordance with GASB Statement No. 45, provides reimbursements to retirees for qualified expenses. Retirees who have at least ten years of service and meet certain criterion based upon retirement date, household income in the most recent calendar year and age are entitled to reimbursements for qualified expenses. Annual maximum reimbursement amounts differ depending on when an employee retired from City service. The majority of retirees may be eligible for a maximum of $4,320 in annual reimbursements. Amendments to benefit provisions are negotiated by various bargaining units at the City and must be approved by Council. In fiscal year 2008-09, the City established an irrevocable exclusive agent multi -employer benefit trust which is administered by Public Agency Retirement Services (PARS). The trust will be used to accumulate and invest assets necessary to reimburse retirees. Separate financial reports are issued by PARS for the OPEB plan. The report can be obtained by writing to PARS at 5141 California Avenue, Suite 150, Irvine, CA. 92617-069, or by calling 800-540-6369. B. Funding Policy Annual required contributions (ARC) are based upon actuarial valuations. The contribution requirements of the ARC are established and may be amended by the City Council. Plan members do not make contributions to the plan; the plan is funded entirely by the employer contributions. The City's annual OPEB cost is calculated based upon the ARC, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City's net OPEB obligation: Annual required contribution 1,877,000 Interest on net OPEB obligation 21,000 Adjustment to the annual required contribution 28,000 Annual OPEB cost 1,870,000 Contnbutions rmde 1,359,742 Increase in net OPEB obligation 510,258 NET OPEB obligation - beginnmg year 379,685 NET OPEB obligation - end of year 889,943 Based upon the valuation dated June 30, 2009, the most recent valuation available, the actuarially required ARC was $1,870,000, and the City contributed $1,359,742 in current fiscal year. 79