HomeMy WebLinkAbout[06b] GASB 45 Requirements - Actuarial AnalysisCITE' QF ti'1: J[/,tittPH .
Council Agenda Item 6 b
MEETING DATE: June 4, 2009
AGENDA ITEM: GASB 45 Requirements -Actuarial Analysis
SUBMITTED BY: Finance
BOARD/COMMISSION/COMMITTEE RECOMMENDATION: N/A
PREVIOUS COUNCIL ACTION: None
BACKGROUND INFORMATION: The Governmental Accounting Standards Board (GASB) requires public-
sectorentities to begin accounting for the promise to provide other post-employment benefits (OPEB)
over the working life of the employee rather than on spay-as-you-go basis (as is currently done by many
public-sector entities).
Even cities that do not contribute directly toward retiree benefits will likely have some GASB OPEB
liability because of a state requirement that early retirees be pooled with active employees for
continued health and dental benefits. This pooling creates an "implicit rate subsidy" that under GASB
should be calculated and accounted for on city financial statements.
Cities with age-banded rates for their medical plan likely will not have an implicit subsidy or GASB OPEB
liability-in general, cities that are fully insured with 50 or fewer employees are issued age-banded
rates. However, if the city "blends" the age-banded rates into asingle/family rate, then the implicit
subsidy likely exists. The City of St. Joseph falls into this category.
The League of Minnesota Cities has partnered with Van Iwaarden Associates to offer actuarial services
to help member cities evaluate and calculate their GASB OPEB liability. Member cities selecting Van
Iwaarden to conduct their actuarial valuations will receive discounted fees.
Van Iwaarden Associates quoted a price of $1,500 to complete St. Joseph's OPEB evaluation. Required
implementation for GASB 45 is year-ended December 31, 2009 for the City of St. Joseph. Staff is
recommending completion of this study to be incompliance with GASB statements. The Audit for 2009
will require this information so the City does not have a choice but to comply. This is another example
of an unfunded mandate that was brought to light after the budget process was completed. This has
not been included in the budget. Staff is requesting to utilize $1,500 from the funds transferred to the
General fund in the previous item.
BUDGET/FISCAL IMPACT:
ATTACHMENTS:
$ 1,500 from the General fund
GASB 45 evaluation quote
REQUESTED COUNCIL ACTION: Accept the quote of $1,500 from Van Iwaarden Associates to
complete a GASB 45 OPEB actuarial study as presented.