GASB OPEB Valuation Results Fiscal Year Justin Kindy, FSA, MAAA Deborah L. Donaldson, FSA, FCA, MAAA November 19, 2009

Transcription

1 GASB OPEB Valuation Results Fiscal Year 2009 Justin Kindy, FSA, MAAA Deborah L. Donaldson, FSA, FCA, MAAA November 19, 2009

2 Agenda Terminology Southern Nevada Health District s (SNHD s) GASB OPEB Plans Questions 1

3 Terminology GASB = Government Accounting Standards Board GASB requires accrual basis recognition During period employees render service Significant increase from pay-as-you-go recognition Effective for plan years beginning after December 15, 2007 for entities with revenues between of at least $10 million but less than $100 million OPEB = Other Postemployment Employee Benefits 2

4 SNHD s GASB OPEB Plans SNHD s Retiree Healthcare and OPEB Healthcare Plans Medical Prescription Drug Dental Life Insurance Liabilities required to be valued under GASB 45 Explicit Subsidy Direct contributions (e.g., Retiree Base Subsidy) Implicit Subsidy Rate pooling between actives and retirees 3

5 SNHD Plans SNHD employees and its retirees can retire under one of two plans based upon the following criteria: Group 1: Retirees currently participating in State of Nevada Public Employee Benefits Program (PEBP) who retired prior to 10/31/08 have the option to stay in the PEBP Plan or join the Clark County Plan One way option to switch to Clark County Plan occurs every even number year Group 2: Employees who retired between 11/1/08 and 7/31/09 had the option to join the PEBP or Clark County Plan One way option to switch to Clark County Plan occurs every even number year Group 3: Employees who retire on or after 8/1/09 will retire under the Clark County Plan 4

6 Summary July 1, 2008 Present Value of Benefits (PVB) $29,125,000 Actuarial Accrued Liability (AAL) $21,540,000 Assets 0 Unfunded AAL $21,540,000 Normal Cost $1,047,000 Amortization of Unfunded AAL 1,173,000 Annual Required Contribution (ARC) $2,221,000 Annual OPEB Cost (AOC) $2,221,000 5

7 Present Value of Benefits (PVB) = $29,125,000 Total present value of all expected future benefits Benefits are defined as paid claims and expenses from the plan, net of retiree contributions The value of the plan benefits as of July 1, 2008, for current and future retirees Includes value of any benefit changes communicated to members 68% of this liability is for active employees (future retirees) 6

8 Actuarial Accrued Liability (AAL) = $21,540,000 Liability accrued as of July 1, 2008 through past service Cost methods allocate the PVB to past and future periods in different ways Entry Age Normal Cost Method Cost allocated on a level basis over the earnings during service of an individual between entry age and assumed retirement age(s) Portion allocated to a valuation year is the Normal Cost 7

9 Normal Cost = $1,047,000 The portion of the PVB that is expected to be earned during Fiscal Year

10 Present Value of All Projected Benefits AAL 74% FY 2009 Normal Cost 4% Future Normal Costs 22% 9

11 Annual Required Contribution (ARC) = $2,221,000 Equals the sum of the Fiscal Year 2009 Normal Cost and an amortization payment of the Unfunded AAL (UAAL) Unfunded AAL = AAL Assets Assets as of 7/1/08 to fund retiree health insurance and life insurance benefits = $0 UAAL = $21,540,000 is amortized based upon the maximum period allowed under GASB 45 (30 years) 10

12 Annual OPEB Cost (AOC) = $2,221,000 AOC equals ARC in first year of adoption In future years, AOC equals the sum of: ARC Interest on Net OPEB Obligation (NOO) ARC Adjustment a 30 year amortization of NOO at end of prior year 11

13 Net OPEB Obligation (NOO) as of June 30, 2009 = $1,625,000 Cumulative difference since GASB 45 adoption (7/1/08) between AOC and the PEBP s contributions to the plan NOO = 7/1/08 NOO + AOC Contributions* NOO = $0 + $2,221,000 - $596,000 *Estimated based on estimated benefit payments (pay-asyou-go) 12

14 Questions 13