Coast Community College District 2018 GASB 75 Roll-Forward Valuation - - PowerPoint PPT Presentation

Coast Community College District 2018 GASB 75 Roll-Forward Valuation

Presented By: Geoffrey L. Kischuk, FSA, FCA, MAAA Total Compensation Systems, Inc. November 7, 2018

Goal:

• Provide information to allow Coast Community

College District to understand the most recent OPEB valuation and make informed decisions about retiree health benefits

Background

• Like GASB 45, GASB 75 requires public agencies to

account for retiree health benefits like pensions

– Accrue benefits while people are working – Retiree premiums/costs taken from liability

• GASB standards apply to accrual basis financial

statements

– Used in Accreditation reviews – Used by bond-rating agencies

• Budgets based on amounts paid for retiree benefits

– Amounts paid for retiree health premiums/costs – Contributions to a trust

Background

• GASB 75 replaced GASB 45 in the 2016-17 fiscal

year

• GASB 75 now requires annual valuations
• Every other year, a streamlined “roll-forward”

valuation method can be used

– Liability calc uses prior year data – Liability updated using valuation assumptions rather than new data – Assets must use updated actual values

• Coast is using a roll-forward valuation for 2017-18

compliance

Key Valuation Assumptions

• 6.0% interest rate
• 4% annual increase in retiree premiums

paid by Coast

• CalPERS and CalSTRS demographic

tables (i.e. mortality, turnover and retirement)

Valuation Results at 6/30/18

• Total OPEB Liability (TOL) – (the present value of

earned benefits): $107.4 million

• Service Cost (value of benefits earned in one year):

$4.9 million

• The Fiduciary Net Position (FNP) – i.e. the value of

plan assets – was $76.1 million

• Net OPEB Liability (NOL) – is $31.3 million
• Expected 2018-19 retiree costs: $6.7 million (Note:

retiree costs reflect actual claims and other costs – not necessarily the same as rates used internally by Coast)

Comparison with 6/30/17 Valuation

6/30/17 6/30/18 Total OPEB Liability (was AAL) $103,166,889 $107,409,737 Service Cost (was NC) $4,772,670 $4,903,918

• Expected AAL changes over time:
• Increased with interest
• Increased for new accruals for employees (i.e.

normal cost)

• Decreased for benefits paid for retirees
• Based on the above, we expected the AAL to continue

to increase.

Comparison with 6/30/17 Valuation

• TOL increased by the expected amount

because no new data was used

• Service Cost also increased by the

expected amount

• FNP increased $382,212 more than

expected

Looking Forward to 6/30/19

• As long as Coast has an ongoing retiree health benefit

program, expect TOL and SC to increase

• Increases will be uneven due to actuarial gains and

losses– extent depends on plan design

• If the plan is being “fully funded” and investment income

matches assumption of 6.0%, assets will keep pace with liability increases

• There are special situations that can cause large

changes

Looking Forward

• Unless limited by plan design or agreement,

actual premium increases can be much different from assumed

• CalPERS and CalSTRS periodically update

their demographic tables – can cause increase or decrease

THANK YOU