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Presentation of biennial actuarial report of retiree health insurance liability
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Submitted by:
John Ruggini and Beth Mbow
Department:
Finance and Human Resources
A. Issue
This is an informational item reporting on the results of the 2024 retiree medical expense and liability actuarial valuation as required under Governmental Accounting Standards Board Statement 75.
B. Background/Options
GASB 75
Federal law requires the City to have prepared on its behalf an actuarial valuation of the City's current retiree health benefit program. This is required by the Governmental Accounting Standards Board and is commonly called "GASB 75." The retiree health program was ended for general employees hired after January 1, 2015. For police officers and supervisors hired after January 1, 2019, and Firefighters hired after January 1, 2021, the City pays a fixed monthly amount towards their retiree health insurance until age 65. A full description of the benefit can be found on page 18-20.
It is important to note that the requirement is only that an actuarial valuation be completed and that the liability be reflected in the City's financial statements. The City is not required to fund the liability, although the state legislature has considered, but never codified that requirement. Historically, the City pays for its post-employment liability (i.e. retiree health insurance) on a "pay as you go" basis, meaning that the City funds the liability one year at a time and does not pre-fund future liability.
Values Reported:
A representative from Milliman, who conducted the valuation, will be present at Tuesday's meeting for a more detailed discussion, but the following is a brief summary. GASB 75 liability typically refers to the calculation called "Unfunded Actuarial Accrued Liability." This is now referred to as the "Other Post-Employment Benefit (OPEB) Liability. This represents the amount of the liability to pay for retirement health insurance for all current employ...
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