Cooperative Educational Service Agency #10. Key Benefit Concepts, LLC

Transcription

1 Key Benefit Concepts, LLC Cooperative Educational Service Agency #10 OPEB Table Updates Measured as of June 30, 2017 For fiscal year reporting June 30, 2017 September 2017 This report, its text, charts, content and formatting are subject to copyright protection and are the exclusive property of Key Benefit Concepts, LLC.

2 Background Currently, the Government Accounting Standards Board (GASB) requires that an Actuarial Valuation of Post Employment Benefits be conducted for use in preparation of the CESA s Financial Report date: For Other PostEmployment benefits: every two or three years depending upon the number of eligible active and former employees For Stipend or Supplemental Pension benefits: every two years regardless of the number of eligible active and former employees. Note: Very large public employers must conduct valuations annually. However, most public entities in Wisconsin fall under the two or threeyear time frame noted. The above guidelines are invalid if there is a material change in the postemployment benefits or eligibility, in which case a new valuation is needed for the current Financial Reporting Year. has not been a material change to the eligibility or benefits, a new actuarial valuation is not required at this time. Thus, the data provided in the most recent valuation report may be used in preparing the reporting for the Financial Report date of June 30, As a billable service requested by the Cooperative Educational Services Agency #10, Key Benefit Concepts updated the tables based upon information provided by the CESA for the financial reporting period ending June 30, The OPEB plan reported under GASB 45 for the year ending June 30, 2016 but is required to report under GASB 75 for the year ending June 30, Since assets are held as annuity contracts, the discount rate was changed to be reflective of a 20year AA municipal bond rate (3.50%) as of the measurement date. All other assumptions and methods remained unchanged from the valuation performed as of July 1, KBC has not reviewed or modified the prior year s accounting Most Recent Valuation of the postemployment obligations, but rather illustrated the Key Benefit Concepts conducted an Actuarial Study of the information in the CESA s prior year s financial reporting. Our Post Employment Benefits for the Cooperative Educational purpose is to provide the actuarial information but not to Services Agency #10 as of July 1, As the valuation falls modify the prior accounting nor evaluate the current within the above noted guidelines, and to our knowledge there accounting of such information. Key Benefit Concepts, LLC Page 1

3 OPEB Table I Projection of Total OPEB Liability Discount Rate 2.50% 3.50% 4.50% Total OPEB liability 6/30/2016 $ 1,726,909 $ 1,659,674 $ 1,594,591 Service cost 78,865 68,959 60,216 Interest 40,244 53,815 66,065 Benefit Payments (313,190) (313,190) (313,190) Changes of benefit terms Differences between expected and actual experience Changes of assumptions or other input Total OPEB liability, 6/30/2017 $ 1,532,828 $ 1,469,258 $ 1,407,682 OPEB Tables In accordance with GASB 75 OPEB Table I

4 OPEB Table II Change in Net OPEB Liability Total OPEB Liability (a) Increase (Decrease) Fiduciary Net Position (b) Net OPEB Liability (a) (b) Balances at 6/30/2016 $ 1,659,674 $ 2,044,143 $ (384,469) Changes for the year: Service Cost 68,959 68,959 Interest 53,815 53,815 Changes of benefit terms Differences between expected and actual experience Changes of assumptions or other input Contributions Employer 38,511 (38,511) Net investment income 133,359 (133,359) Benefit payments (313,190) (313,190) Administrative expense Net Changes (190,416) (141,320) (49,096) Balances at 6/30/2017 $ 1,469,258 $ 1,902,823 $ (433,565) OPEB Tables In accordance with GASB 75 OPEB Table II

5 OPEB Table III Sensitivity of Net OPEB Liability to Changes in Discount Rate 1% Decrease Current Discount Rate 1% Increase 2.50% 3.50% 4.50% Total OPEB Liability $ 1,532,828 $ 1,469,258 $ 1,407,682 Fiduciary Net Position 1,902,823 1,902,823 1,902,823 Net OPEB Liability 6/30/2017 $ (369,995) $ (433,565) $ (495,141) Sensitivity of Net OPEB Liability to Changes in Healthcare Cost Trend Rates 1% Decrease (6.5% decreasing to 4.0%) Healthcare Cost Trend Rates (7.5% decreasing to 5.0%) 1% Increase (8.5% decreasing to 6.0%) Total OPEB Liability $ 1,411,137 $ 1,469,258 $ 1,527,182 Fiduciary Net Position 1,902,823 1,902,823 1,902,823 Net OPEB Liability 6/30/2017 $ (491,686) $ (433,565) $ (375,641) OPEB Table III

6 2017 Total OPEB Liability Service Cost $ 68,959 Interest 53,815 Changes of benefit terms Differences between expected and actual experience Changes of assumptions or other input Benefit payments (313,190) Net change in total OPEB liability $ (190,416) Total OPEB liability beginning 1,659,674 Total OPEB liability ending (a) $ 1,469,258 Fiduciary Net Position Contributions Employer $ 38,511 Net investment income 133,359 Benefit payments (313,190) Administrative expense Net change in fiduciary net position $ (141,320) Fiduciary net position beginning 2,044,143 Fiduciary net position ending (b) $ 1,902,823 Net OPEB Liability OPEB Table IV Schedule of Changes in Net OPEB Liability and Related Ratios Net OPEB liability ending (a) (b) $ (433,565) Fiduciary net position as a percentage of the total OPEB liability % Covered payroll $ 1,704,674 Net OPEB liability as a percentage of covered payroll 25.43% OPEB Table IV

7 OPEB Table V Schedule of Collective Deferred Inflows and Outflows Gain/Loss Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience $ $ Changes of assumptions or other input Net difference between projected and actual earnings on OPEB plan investments Total $ $ Amounts reported as deferred outflows and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year ended June 30: 2018 $ Thereafter OPEB Table V

8 OPEB Table VI Calculation of Collective OPEB Expense Change in Net OPEB Liability $ (49,096) (Increase)/Decrease in Deferred Outflows Increase/(Decrease) in Deferred Inflows Contributions Employer 38,511 OPEB Expense $ (10,585) Operating Expenses Service Cost $ 68,959 Contributions Employee Administrative expenses Total (a) $ 68,959 Financing Expenses Interest $ 53,815 Actual return on assets (133,359) Total (b) $ (79,544) Changes Benefit changes $ Recognition of assumption changes Recognition of experience gains and losses Recognition of investment gains and losses Total (c) $ OPEB Expense (a + b + c) $ (10,585) OPEB Expense as % of Payroll 0.62% OPEB Table VI

9 OPEB Table VII Schedule of Employer Contributions Last 10 Fiscal Years 2017 Actuarially Determined Contribution (ADC) $ 38,511 Contributions in Relation to the ADC 38,511 Contribution Deficiency/(Excess) $ CoveredEmployee Payroll $ 1,704,674 Contributions as a percentage of Covered Employee Payroll 2.26% Key Methods and Assumption Used to Calculate ADC Actuarial cost method Entry Age Normal Asset valuation method Market Value Amortization method 30 year Level $ Discount rate 4.00% Inflation 3.00% OPEB Table VII

10 OPEB Table VIII The major assumptions and methods used in the underlying valuation are as follows. However, any changes in assumptions since the previous valuation are noted in red: 1 Valuation Date July 1, Measurement Date June 30, Reporting Date June 30, Actuarial Cost Method Entry Age Normal (level percent of salary) 5 Medical Care Trend 7.50% decreasing by 0.50% per year down to 6.50%, then by 0.10% per year down to 5.0%, and level thereafter 6 Discount Rate 3.50% (based upon all years of projected payments discounted at a 3.50% longterm expected rate of return) OPEB Table VIII