Docstoc

Nevada GFOA Annual Conference

Document Sample
Nevada GFOA Annual Conference Powered By Docstoc
					  Nevada GFOA Annual
      Conference


WCSD OPEB Planning
Background   and Actions Taken
Preliminary Actuarial Studies

Various Scenarios

Pre-Funding

AB 286 Impact and Tentative Changes

Where do we go next?
Presenter - Gary Kraemer, CFO - WCSD

January 9-10, 2006                     1
Background Information


WCSD’s Current Plan
 Subsidize up to 40% of retiree premium

 Requires 15 years of service

 Subject to cap based on assessed valuation

 Currently 1,293 retiree participants

 Currently 5,919 active participants




                                               2
Actions Taken

 Preliminary actuarial studies
 Ongoing meetings with associations/retirees

 Communications with Board

 Set up Pre-Funded OPEB Fund

 Exploring alternative funding vehicles
    – HRAs
    – HSAs
    – VEBAs, etc.

                                                3
Preliminary Actuarial Studies


 Health Benefits
  $119 million Actuarial Accrued Liability

  $10.5 million Annual Required Contribution



 Life Insurance
  $23.6 million AAL for life insurance subsidy

  $725,000 ARC for life insurance subsidy


                                                  4
Various Scenarios



 Scenarios (agreed upon w/associations)
  Years of Service (YOS)
    – Change Years of Service from 15 to 20
    – Potential ARC Savings $1.4 million
  Eligibility   Age
    – Change from none to 55, 60 and 65
    – Savings $4.1 million-age 65 and 20 YOS

                                               5
Various Scenarios (cont.)



 Scenarios (cont.)
  Subsidy Ends at a Certain Age
   – Ends at age 65 and 20 YOS needed
   – Potential ARC Savings $6.5 million
  $60   Per Year of Service (DC Plan)
   – Versus current 15 YOS
   – Savings $3.5 million

                                          6
Pre-Funding

 Fundset up in 2004
 Scheduled Contributions
  – $2.3 million in FY04
  – $1.0 million in FY 05
  – $3.5 million in FY 06
 Goal to reach $9 million by FY 13
 Pay-as-you-go continues at $2+ million

                                           7
AB 286 Impact

 School    Districts
   – Costs primarily being paid by the State


 Cities,   Counties and Special Districts
   – Costs paid by each entity (not the State)




                                                 8
AB 286 Impact (cont.)

 School   Districts
  – State subsidy for FY 05 $7.9 million
  – State subsidy for FY 06 $8.4 million
  – State subsidy for FY 07 $9.2 million


 Rule   of Thumb
  – Actuarial ARC is 6 times “pay-as-you-go”

                                               9
AB 286 Impact (cont.)

 Major   Question for School Districts
  – Will the State continue to fund subsidy?
  – Explicit and implicit actuarial issue?
 State   Budget Factors
  – GASB No. 45 Implementation by State
  – $119 million ARC in FY 08
  – $1.3 billion Unfunded Actuarial Liability

                                                10
Tentative Changes

Tentative Teacher Agreement
   Sunset Active Employees
    – New retirees after August 31, 2006
    – AB 286 still available to new retirees
   Other AB 286 Factors
    – Only available to those retiring after 12/31/93
    – Net payments for AB 286 offset cap on our plan
    – Movement between plans only every 2 years

                                                        11
Where Do We Go Next?




  Options
   –   Go it alone with a single employer plan
   –   Establish agent multiple ER plan
   –   Establish cost sharing multiple ER plan
   –   Work to limit AB 286


                                                 12
Where Do We Go Next? (cont.)




  Benefits   of multiple ER plan
   – Pooled investments
   – Pooled administrative functions
   – Especially helpful for smaller entities




                                               13
Where Do We Go Next? (cont.)




  Work   to Limit Cost of AB 286
   –   Increase years of service requirement
   –   Limit subsidy amount
   –   Minimum Age requirement
   –   Coordinate subsidy with Medicare
   –   Change to defined contribution plan

                                               14
Other Issues

 Change    law so OPEB plans can invest
  similar to PERS to increase return
 OPEB costs for State may limit
   – State subsidy for AB 286 for school
     districts
   – Possible raises for school district EEs
 Sunsetting   AB 286 for New Hires
   – Minimal reduction in ARC in early years

                                               15
Resources

   State Government Retiree Health
    Benefits:Current Status and Potential Impact
    of New Accounting Standards
    www.aarp.org/ppi
   The Next Retirement Time Bomb by Milt
    Freudenheim and Mary Williams Walsh, New
    York Times, December 11, 2005 (Duluth, MN)
   How States Are Responding to the Challenge of
    Financing Health Care for Retirees, Henry J.
    Kaiser Family Foundation www.kff.org.
   The Not So Golden Years Credit Implications of
    GASB 45 Fitch www.fitchratings.com



                                                 16
Summary

 OPEB   and AB 286 are coming soon
 Actuarial studies must be made

 Investing laws should be changed

 Collaboration is needed




                                      17

				
DOCUMENT INFO
Categories:
Tags:
Stats:
views:17
posted:6/12/2012
language:English
pages:17