Multiple Employer Trusts and OPEB Prefunding by CERBT Employers. Rand Anderson CalPERS Constituent Relations Office

Transcription

1 Multiple Employer Trusts and OPEB Prefunding by CERBT Employers Rand Anderson CalPERS Constituent Relations Office

2 Discussion Overview Multiple Employer Trusts Well Known Providers Legal Basis Tax Form Some Important Questions Pre-funding by CERBT Employers 2/22/2011 2

3 Some California OPEB trust service providers Keenan PFM Service Provider California Employers Retiree Benefit Trust (CERBT ) California School Boards Authority (CSBA) GASB 45 Solutions California Special Districts Association (CSDA) Trust Program Pacific Public Partners PARS GASB 45 Plan Self Insured Schools of California (SISC) GASB 45 Trust CalPERS Keenan Insurance Brokerage San Bernardino County Employee Retirement System Public Agency Retirement Services Public Finance Management Group Wachovia Administrator Public Agency Retirement Services Public Agency Retirement Services Other information mgmt; GASB 43 reporting. mgmt. mgmt. mgmt. Investment management mgmt. mgmt. mgmt.

4 Legal Basis California multiple employer trust funds can be categorized by their legal basis Established in state law: CERBT (CalPERS) and Pacific Public Partners (SBCERS) Established in plan document: all others

5 Likeliest Tax Form No accident that the multiple employer OPEB liability trusts listed are all IRC 115(1) trusts IRC Section 115(1) requires two compliance duties: Trust income derives from exercise of an essential governmental function Trust income accrues exclusively to a State or to its political subdivision Political subdivisions of the state and section 115 entities may join the IRC 115(1) trust. - Determining which agencies are section 115 entities is a tricky business.

6 Some Important Questions for a Trust Service Provider Who is responsible for investment policy, strategy, and management? Most (3/4+) want to delegate that responsibility Does the expected long term investment rate of return and volatility match the employer s financial requirements? What administrative services does employer require? Mostly contributions, disbursements, statements How much does the program service cost? Who reports compliantly for the OPEB plan?

7 Some Important Caveats About Following Data Member means active employee, retiree, or vested terminated employee Courts include miscellaneous category employees but not judges These results are adjusted, using actuarial methods, to align to the CAFR date on which we reported them The number of participating employers changed each year; smaller employers tended to join later Three years does not make a trend or lead to a conclusion, but the results are interesting

8 CERBT Employer Counts by Reporting Year CERBT COUNT /30/2007 City County Schools Special District Court State

9 CERBT Employer Present Value of Benefits Thousands THE AVERAGE TOTAL PRESENT VALUE BENEFIT PER MEMBER WITHIN CERBT Dollars (Amounts in 000's) Avg PVB per Member City County Schools Special District Court (Non-Judges)

10 CERBT Employer OPEB Pre-Funding Progress THE BREAKDOWN OF ACTUARIAL ACCRUED LIABILITY FOR ALL EMPLOYERS WITHIN CERBT IN PERCENTAGE (AAL = AVA + UAL) 100% 90% 88% 89% 86% 86% 85% 81% 97% 95% 93% 85% 85% 80% 72% 87% RATE 80% 70% 60% 50% 40% 30% 20% UAL 10% 0% 12% 11% 14% 14% 15% 19% 3% 5% 7% 15% 15% 20% 28% 13% AVA City County Schools Special District Court (Non-Judges)

11 CERBT Employer Contributions 10,000 9,000 THE AVERAGE ANNUAL CONTRIBUTION TOWARD ARC OF CERBT EMPLOYERS 8,000 7,000 6,000 Avg Benefit Payment per Retiree Dollars 5,000 4,000 3,000 2,000 1,000 Avg Pre-funding Contribution Less Retiree Benefit Payment per Non Retiree 0 Avg Pre-funding Contribution per Member City County Schools Special District Court (Non-Judges)

12 CERBT Employer ARC Components BREAKDOWN OF ANNUAL REQUIRED CONTRIBUTION IN PERCENTAGE BY GROUP RATE 240% 220% 200% 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% -20% -40% -60% -80% -100% -120% -140% 41% 38% 36% 0% 9% 74% 21% 17% 20% 62% 33% 37% 41% 27% 37% 34% 42% 32% 54% 3% 22% 157% 50% 49% 145% 54% 60% -1% 49% 59% 24% 185% 76% 63% 64% 36% -11% -33% -2% -95% -81% -126% NOO Benefit Payments Trust Pre- Funding City County Schools Special District Court (Non-Judges)

13 Questions? Where to get Information? CERBT CalPERS Website Employer Contact Center (888) CalPERS ( ) 2/22/