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

 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

GASB 75 Key Takeaways

2

Board of Trustees Meeting – November 9, 2017

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

3

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

 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.

MSJC Actuarial Study

5

Board of Trustees Meeting – November 9, 2017

 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.

MSJC Actuarial Study

6

Board of Trustees Meeting – November 9, 2017

7

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. Board of Trustees Meeting – November 9, 2017

Total OPEB Liability (TOL) & Net OPEB Liability (NOL)

8

Board of Trustees Meeting – November 9, 2017

Irrevocable Trust

Remaining Liability

9

Changes in Net OPEB Liability

Board of Trustees Meeting – November 9, 2017

OPEB Expense

10

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

 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

MSJC Actuarial Study

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