Board of Trustees Meeting November 9, 2017 Retiree Benefits - PowerPoint PPT Presentation

Mt. San Jacinto College Board of Trustees Meeting November 9, 2017 Retiree Benefits Liability Actuarial Study and GASB 74/75 Update

GASB 75 Key Takeaways  Basic accounting and reporting will be similar to pensions  Employers will need to be much more involved with selecting the actuary, approving assumptions, documenting the plan and providing the census data  Info will need to be retained to show 10 year history  Audit procedures are likely to be expanded 2 Board of Trustees Meeting – November 9, 2017

3 New OPEB Standards: Summary  Unfunded liability goes on balance sheet  Discount rate based on how long dedicated assets will cover current plan members’ future benefits  Shorter time horizons for recognizing asset and liability changes in OPEB expense  Standardized method for determining OPEB liability (as opposed to choice of 6)  Actuarial valuation every 2 years

MSJC Actuarial Study  MSJC selected Total Compensation Systems, Inc. (TCS) to analyze liabilities associated with its current retiree health program as of June 30, 2017(the valuation date). 4 Board of Trustees Meeting – November 9, 2017

MSJC Actuarial Study  TCS actuarial study is intended to serve the following purposes:  To provide information to manage the costs and liabilities associated with retiree health benefits.  To provide information to communicate the financial implications of retiree health benefits  To provide information needed to comply with GASB Accounting Standards 74 and 75 related OPEB. 5 Board of Trustees Meeting – November 9, 2017

MSJC Actuarial Study  All cost and liability figures contained in this study are estimates of future results.  Future results can vary dramatically and the accuracy of estimates contained in this report depends on the actuarial assumptions used.  Service costs and liabilities figures could easily vary by 10 - 20% or more from estimates contained in this report. 6 Board of Trustees Meeting – November 9, 2017

General Findings/Summary  For current employees, the value of benefits "accrued" in the year beginning July 1, 2017 (the service cost) is $683,856.  Service Cost would increase each year based on covered payroll.  Total OPEB Liability (TOL): $11,590,212  The amount of the actuarial present value of projected benefit payments attributable to employees’ past service.  Irrevocable Trust: $4,611,072 Also know as the Fiduciary Net Position (FNP)   Net OPEB Liability: $6,979,140  The Total OPEB Liability minus the Fiduciary Net Position. 7 Board of Trustees Meeting – November 9, 2017

Total OPEB Liability (TOL) & Net OPEB Liability (NOL) Irrevocable Trust Remaining Liability Board of Trustees Meeting – November 9, 2017 8

Changes in Net OPEB Liability Board of Trustees Meeting – November 9, 2017 9

10 OPEB Expense Under GASB 74 and 75, OPEB expense includes service cost, interest cost, change in TOL due to plan changes. Board of Trustees Meeting – November 9, 2017

MSJC Actuarial Study  The District’s Irrevocable Trust is held with the California Employers Retiree Benefit Trust (CERBT); a not for profit organization  The District budgeted $500,000 in the 2017/18 Adopted Budget to contribute to the Irrevocable Trust 11 Board of Trustees Meeting – November 9, 2017

Questions? Board of Trustees Meeting November 9, 2017 Source: Total Compensation Systems, Inc. Actuarial Study of Retiree Health Liabilities, dated October 26, 2017