HomeMy WebLinkAboutFin Retiree Healthcare Reporting & FundingSAN RAFAEL
THE CITY WITH A MISSION
Agenda Item No: 6.b
Meeting Date: September 18, 2017
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Finance
Prepared by: Mark Moses, City Manager Approval:
Finance Director
TOPIC: RETIREE HEALTHCARE REPORTING AND FUNDING
SUBJECT: ACCEPT GOVERNMENTAL ACCOUNTING BOARD STATEMENT NO. 75 REPORT
ON RETIREE HEALTHCARE AND ADOPT OTHER POSTEMPLOYMENT BENEFITS
(OPEB) FUNDING POLICY
RECOMMENDATION: ACCEPT REPORT AND ADOPT RESOLUTION AS PRESENTED
BACKGROUND: In June 2015, the Governmental Accounting Standards Board (GASB) changed its
approach in regard to reporting on other postemployment benefits, or OPEB (e.g., retiree healthcare
and other retiree benefits aside from defined benefit pension). The prior approach, under GASB
Statement No. 45, required that each agency report as a liability the difference between its actual
OPEB contribution and its actuarially required contribution. The new approach, GASB Statement
No. 75 (GASB 75) is similar to that of GASB 68 for pension reporting: It requires that the net OPEB
liability (total OPEB liability less market value of assets) be presented on the City's government -wide
statement of net assets (balance sheet). The City is not required to implement GASB 75 until the fiscal
year ending June 30, 2018. In order to increase financial transparency, it has elected to implement this
statement for the fiscal year ended June 30, 2017. Financial statements reflecting this reporting will be
presented during the fall 2017. This staff report transmits the City's first GASB 75 report that is being
used in the preparation of these statements.
The City of San Rafael is also committed to adopting best fiscal practices and to fully use the
knowledge, resources and experience available throughout the industry. Public agencies that offer
defined retirement benefits to their employees should fund the cost of those benefits in an equitable
and sustainable manner. The City has had an informal policy of contributing the full actuarially required
OPEB contribution for the past several years. In order to achieve consistency with best practices, staff
has prepared a written OPEB funding policy for the consideration of the City Council, that codifies this
practice.
The content of this report was reviewed by the City Council Pension-OPEB Subcommittee at its
meeting of August 23, 2017, at which time direction was given to bring these items forward.
FOR CITY CLERK ONLY
File No.: 4-3-476 x 9-3-20
Council Meeting: 09/18/2017
Disposition: Resolution 14395
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
ANALYSIS:
(1) Actuarv's Accountinq Information Report on Retiree Health Care (prepared in accordance with
GASB 75).
In order to implement GASB 75, the City engaged the actuary firm Bartel & Associates to prepare a
GASB 75 -compliant accounting information report. The report used the most recent biennial actuarial
valuation, which was prepared as of June 30, 2015, and is attached to this staff report.
The City's Plan covers 336 retirees and 348 active employees. The report measures the Net OPEB
Liability at June 30, 2017 at $33,786,000. This is based on a total OPEB Liability of $49,543,000, and
assets (Fiduciary Net Position) of $15,757,000, and represents a funding status of approximately 32%
as presented on slide 5 of the report.
The report provides sensitivity analysis that measures the impact on Net OPEB Liability due to changes
in the discount rate and due to changes in healthcare trend. A one percent decrease in the discount
rate would increase the Net OPEB Liability to $39,500,000, while a one percent decrease would result
in a Net OPEB Liability of $28,996,000. A one percent decrease in the healthcare cost trend rate would
lower the Net OPEB Liability to $30,786,000, while a one percent increase in the trend would raise it to
$37,160,000.
The OPEB expense for the fiscal 2016-2017 year as measured under GASB is $3,283,000. Total
covered employee payroll for the period was $32,885,000.
(2) OPEB Fundinq Policv
Staff reviewed the following information and documents that provided the basis for the OPEB funding
policy development:
• GFOA Sustainable Funding Practices for Defined Benefit Pensions and Other Postemployment
Benefits (OPEB) — January 2016
• City of San Rafael Comprehensive Annual Financial Statements (June 30, 2016)
• GASB Statement No. 75 — Accounting and Financial Reporting for Postemployment Benefits
Other Than Pensions
• June 30, 2017 GASBS 75 Accounting Information As of Measurement Date June 30, 2016,
Based on the June 30, 2015 Actuarial Valuation
Result: The proposed City of San Rafael OPEB Funding Policy was developed with the following
provisions:
Purpose: The purpose of this policy is to provide assurance that the costs of the City's retiree
healthcare will be funded in an equitable and sustainable manner, and that the City will comply with all
relevant federal and state laws and applicable regulatory requirements in the administration of its plans.
It codifies the City's commitment to fund these benefits based on regular actuarial valuations, and to
measure and report them in accordance with Generally Accepted Accounting Principles. Adhering to a
funding policy that embodies these funding and accounting principles is a prudent governance practice,
and helps achieve intergenerational equity among those who financially support the plan. It also
ensures that resources are available to fulfill the City's contractual promises to its employees, and
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
minimizes the chance that funding of these benefits will interfere with the City's ability to provide
essential services to the public.
In order to achieve the purpose of thisop licy, the City will take the following. actions:
1.) The City's goal is to fully fund amount of the ADC (Actuarially Determined Contribution*) each year.
In the event the City is unable to fund the full amount of the ADC in a given year without borrowing, the
Finance Director and City Manager will identify a timeframe under which to return to full funding.
2.) The Pension-OPEB Subcommittee will review the ADC each fiscal year, and recommend the level
of funding to be considered by the full City Council for adoption in the budget.
3.) The City supports an ADC that is calculated in a manner that fully funds the long-term costs of
retiree medical benefits, while balancing the goals of:
a) keeping contributions relatively stable; and
b) equitably allocating the costs over the employees' period of active service.
4.) The City will demonstrate accountability and transparency by communicating all of the information
necessary for assessing the City's progress toward meeting its retiree medical funding objectives. As
part of the annual budget adoption process, the Finance Director and City Manager will report to the
City Council on the following:
a) most recent actuarially determined OPEB contribution (ADC)
b) relationship between ADC and budgeted OPEB contribution
c) projected ADC for next three years
d) impact of funding full ADC over the three-year planning horizon
e) any other significant issues associated with funding retiree medical benefits in a
stable and equitable manner as described in #2 above.
5.) The City will implement Governmental Accounting Standards Board Statement No. 75 -Accounting
and Financial Reporting for Postemployment Benefits Other Than Pensions
beginning with the fiscal year ended June 30, 2016.
6.) Staff will monitor changes to and expansions of OPEB funding best practices, as well as any
additional guidance provided by the Government Finance Officer's Association that relate to the funding
retiree medical benefits. Staff will return to City Council with modifications to this policy as needed.
7.) The City Manager will ensure that any recommended changes to the plans are fully consistent with
the requirements of the Public Employees' Medical & Hospital Care Act (PEMHCA) and any and all
other applicable federal and state regulations, and that the City Attorney's Office be assigned or other
qualified legal counsel be retained to ensure that all public notice, legal and procedural requirements
are fulfilled.
* - Under GASB 45, the actuary calculated an "Actuarially Required Contribution," or "ARC." Under GASB 75, the
actuary now calculates an "Actuarially Determined Contribution," or "ADC."
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4
FISCAL IMPACT: There is no direct fiscal impact from accepting the policy as proposed.
RECOMMENDATION: Staff recommends that the City Council accept the report and adopt the
Resolution as presented.
ATTACHMENTS:
Accounting Information as of Measurement Date June 30, 2017 (prepared by actuary)
Resolution establishing OPEB Funding Policy
RAF,
f
�r
r WITH F
City of San Rafael
B/IRT E L Retiree Healthcare Plan
11SSOC1ATES. L1.
June 30, 2017 GASBS 75 Accounting Information
As of Measurement Date June 30, 2016
Based on the June 30, 2015 Actuarial Valuation
Doug Pryor, Vice President
Tak Frazita, Associate Actuary
Bartel Associates, LLC
August 14, 2017
Contents
Topic Page
Applicable Dates 1
Note Disclosures 2
Required Supplementary Information 13
Actuarial Certification 18
Supporting Calculations 19
6� 8/14/17
Applicable Dates
Applicable Dates and Periods
2016/17
Employer
Fiscal Year
■ Measurement Date June 30, 2016
■ Measurement Period July 1, 2015 to
June 30, 2016
■ Actuarial valuation date June 30, 2015
Note Disclosures
Plan Information
Fiscal Year End June 30, 2017
■ Plan Type Single Employer
■ OPEB Trust Yes
■ Special Funding Situation No
■ Nonemployer Contribution Entities None
8/14/17 2
City of San Rafael
City of San Rafael
Note Disclosures
Expected Long -Term Rate of Return*
Target I Expected Real
Allocation I Rate of Return
■ Asset Class Component
• Public Equity
57%
5.96%
• Fixed Income
27%
2.65%
• TIPS
5%
2.50%
• Commodities
3%
5.20%
• REITs
8%
8.13%
■ Assumed Long -Term Rate of Inflation
2.75%
■ Assumed Long -Term Investment Expenses
n/a
■ Expected Long -Term Net Rate of Return
7.28%
■ Discount Rate"
7.25%
* Provided by Ca1PERS' Strategic Asset Allocation Analysis Overview in August 2014 — Strategy 1
** The fiduciary net position is projected to be sufficient to make projected benefit payments, and
the plan assets are expected to be invested using the strategy to achieve the expected return.
6� 8/14/17
3
Note Disclosures
Covered Emplovees
At June 30, 2017, the reporting date, the following numbers of
employees were covered by the benefit terms:
■ Inactives currently receiving benefits
■ Inactives entitled to benefit payments
■ Active employees
■ Total
Number of
Covered
Participants
336
0
348
684
City of San Rafael
~ 8/14/17 4 City of San Rafael
Note Disclosures
Net OPEB Liabilitv/(Asset)
(Amounts in 000's)
■ Measurement Date
■ Total OPEB Liability (TOL)
■ Fiduciary Net Position (FNP)
■ Net OPEB Liability (NOL)
■ Funded status (FNP/TOL)
6� 8/14/17
Fiscal Year Ending
6/30/17 6/30/16
6/30/16 6/30/15
$ 49,543 $ 48,226
15,757 15,608
33,786 32,618
31.8% 32.4%
5
Note Disclosures
i
Changes in Net OPEB Liability/(Assets)
(Amounts in 000's)
City of San Rafael
Total
Fiduciary
Net
OPEB
Net
OPEB
Liability
Position
Liability
■ Balance at 6/30/15
$ 48,226
$ 15,608
$ 32,618
■ Changes for the year
• Service Cost
766
-
766
• Interest
3,447
-
3,447
• Difference between actual and
-
-
-
• Assumption changes
-
-
-
• Contributions - employer
-
2,896
(2,896)
• Contributions - employee
-
-
-
• Net investment income
-
157
(157)
• Benefit payments and refunds*
(2,896)
(2,896)
-
• Administrative expenses
-
(7)
7
■ Net Changes
1,317
149
1,167
■ Balance at 6/30/16
49,543
15,757
33,786
* Includes $702,000 in Implied Subsidy
benefit payments
~�
6
City San Rafael
8/14/17
of
Note Disclosures
Sensitivitv of Net OPEB Liabilitv
(Amounts in 000's)
■ Changes in the Discount Rate
Discount Rate
6.25% 7.25% 8.25%
(1% Decrease) (Current Rate) (1% Increase )
■ Net OPEB Liability $ 39,500 $ 33,786 $ 28,996
■ Changes in the Healthcare Trend Rate
Healthcare Trend Rate
1% Decrease Current Trend 1% Increase
■ Net OPEB Liability $ 30,786 $ 33,786 $ 37,160
(01'1)
8/14/17 7 City of San Rafael
Note Disclosures
OPEB Expense for Fiscal Year
(Amounts in 000's)
2016/17
■ OPEB Expense $ 3,283
See slide 23 for OPEB expense detail, which is not required disclosure.
(01'1)
8/14/17 8 City of San Rafael
Note Disclosures I
Deferred Outflows/Inflows Balances at June 30, 2017
(Amounts in 000's)
June 30, 2017
Deferred Deferred
Outflows of Inflows of
Resources Resources
■ Differences between expected and
actual experience $ -
■ Changes of assumptions -
■ Net difference between projected and
actual earnings on plan investments* 780
■ Employer contributions made
subsequent to the measurement date** 3,475
■ Total 4,255
* Combine Deferred Inflows and Outflows for footnote disclosure.
17 8/14/17
9
Note Disclosures
Recognition of Deferred Outflows and Inflows of Resources
in Future OPEB Expense
(Amounts in 000's)
Deferred
Outflows/(Inflows)
FYE June 30 of Resources
■ 2018 $ 195
■ 2019 195
■ 2020 195
■ 2021 195
■ Thereafter -
City of San Rafael
~ 8/14/17 10 City of San Rafael
Note Disclosures
Significant Actuarial Assumptions Used for Total OPEB Liabilitv
Actuarial Assumption June 30, 2016 Measurement Date
■ Actuarial Valuation Date ■ June 30, 2015
■ Contribution Policy ■ City contributes full ADC
■ Discount Rate ■ 7.25% at June 30, 2016
■ 7.25% at June 30, 2015
■ Expected Long -Term ■ Same as discount rate - expected City
Rate of Return on contributions projected to keep sufficient plan
Investments assets to pay all benefits from trust.
■ General Inflation ■ 2.75% per annum
■ Mortality, Retirement, ■ Same as June 30, 2015 actuarial valuation
Disability, Termination
■ Mortality Improvement ■ Mortality projected fully generational with Scale
MP -14, modified to converge to ultimate
improvement rates in 2022
8/14/17 11 City of San Rafael
Note Disclosures
Significant Actuarial Assumptions Used for Total OPEB Liabilitv
Actuarial Assumption June 30, 2016 Measurement Date
■ Salary Increases ■ Aggregate -3%
■ Merit - 6/30/14 MCERA assumptions
■ Medical Trend ■ Non -Medicare — 6.5% for 2017, decreasing 0.5%
per year to an ultimate rate of 4.50% for 2021 and
■ Medicare — 6.7% for 2017, decreasing to an
ultimate rate of 4.5% for 2021 and later years
■ Helthcare participaiton ■ Capped benefit: 100% currently covered, 80%
for future retirees currently waived
■ PEMHCA minimum - 60%
■ Cap Increases ■ None
~ 8/14/17 12 City of San Rafael
Required Supplementary Information
Schedule of Changes in Net OPEB Liabilitv/(Assets) and Related Ratios
(Amounts in 000's)
■ Changes in Total OPEB Liability
• Service Cost
• Interest
• Difference between actual and
expected experience
• Assumption changes
• Benefit payments including refunds
• Changes of benefit terms
■ Net Changes
■ Total OPEB Liability (beginnning of year)
■ Total OPEB Liability (end of year)
Fiscal Year
2016/17
766
3,447
(2,896)
1,317
48,226
49,543
8/14/17 13 City of San Rafael
Required Supplementary Information
Schedule of Changes in Net OPEB Liabilitv/(Assets) and Related Ratios
(Amounts in 000's)
~ 8/14/17 14 City of San Rafael
Fiscal Year
2016/17
■ Changes in Plan Fiduciary Net Position
• Contributions - employer
$ 2,896
• Contributions - employee
-
• Net investment income
157
• Benefit payments and refunds
(2,896)
• Administrative expenses
(7)
• Other changes
-
• Net Changes
149
■ Plan Fiduciary Net Position (beginnning of year)
15,608
■ Plan Fiduciary Net Position (end of year)
15,757
~ 8/14/17 14 City of San Rafael
Required Supplementary Information
Schedule of Changes in Net OPEB Liabilitv/(Assets) and Related Ratios
(Amounts in 000's)
Fiscal Year
2016/17
■ Net OPEB Liability/(Asset) $ 33,786
• Fiduciary Net Position as a percentage of the
Total OPEB Liability 31.8%
■ Covered employee payroll* 31,106
• Net OPEB Liability as a percentage of covered 109%
employee payroll
* Determined for the 12 months period ending on June 30, 2016 (Measurement Date).
6�8/14/17 15 City of San Rafael
Required Supplementary Information
Schedule of Emolover Contributions
(Amounts in 000's)
Fiscal Year
2016/17
■ Actuarially Determined Contribution (ADC) $ 3,450
■ Contributions in relation to the actuarially 3,475
determined contribution
■ Contribution deficiency/(excess) (25)
■ Covered employee payroll* 32,885
• Contributions as a percentage of covered 11%
employee payroll
* Determined for the 12 months period ending on June 30, 2017 (fiscal year end).
~ 8/14/17 16 City of San Rafael
Required Supplementary Information
Notes to Schedule of Emplover Contribution
Methods and Assumptions for
Actuarially Determined Contribution
■ Valuation Date
■ Actuarial Cost Method
■ Amortization Method
■ Remaining Amortization
■ Asset Valuation Method
■ Discount Rate
■ June 30, 2015
■ Entry Age Normal, Level Percentage of Payroll
■ Level dollar amount, over approximate 10 -year
period
■ 19 years remaining as of June 30, 2016
■ Investment gains and losses spread over 5 -year
rolling period
■ 7.25%
8/14/17 17 City of San Rafael
Actuarial Certification
This report presents the City of San Rafael Retiree Healthcare Plan 2017 disclosure under Governmental Accounting Standards
Board Statement No. 75 (GASBS 75).
The report provides information intended for reporting under GASBS 75, but may not be appropriate for other purposes.
Information provided in this report may be useful to the City for the Plan's financial management. Future valuations may differ
significantly if the Plan's experience differs from our assumptions or if there are changes in Plan design, actuarial methods, or
actuarial assumptions. The project scope did not include an analysis of this potential variation.
The valuation is based on Plan provisions, participant data, and asset information provided by the City as summarized in this
report, which we relied on and did not audit. We reviewed the participant data for reasonableness. As permitted under GASBS
68, the total OPEB liability has been calculated from the June 30, 2015 actuarial valuation. Additional information on
participants included in the valuation, actuarial assumptions, and asset infromation can be found in the June 30, 2015 funding
actuarial valuation report.
To the best of our knowledge, this report is complete and accurate and has been conducted using generally accepted actuarial
principles and practices. Additionally, in our opinion, actuarial methods and assumptions comply with GASBS 75. As members
of the American Academy of Actuaries meeting the Academy Qualification Standards, we certify the actuarial results and
opinions herein
Respectfully submitted,
Doug Pryor, ASA, EA, MAAA Tak Frazita, ASA, EA, MAAA
Vice President Associate Actuary
Bartel Associates, LLC Bartel Associates, LLC
August 14, 2017 August 14, 2017
~� 8/14/17 18 City of San Rafael
I Supporting Calculations i
Recognition of Deferred Outflows/Inflows at June 30, 2017
Differences between Expected and Actual Experience
(Amounts in 000's)
Meas. Fiscal
Period Year
15/16 16/17
Total
11) 8/14/17
Balances of
Initial Amount Recognized in OPEB Expense Deferred
Initial Recog for FY June 30, 2017
Amt Period 16/17 17/18 18/19 19/20 20/21 Outflows Inflows
$ - $ - $ - $ - $ - $ - $ - $
19 City of San Rafael
Supporting Calculations
Recognition of Deferred Outflows/Inflows at June 30, 2017
Changes of Assumptions
(Amounts in 000's)
Meas. Fiscal
Period Year
15/16 16/17
Total
8/14/17
Balances of
Initial Amount Recognized in OPEB Expense Deferred
Initial Recog for FY June 30, 2017
Amt Period 16/17 17/18 18/19 19/20 20/21 Outflows Inflows
20 City of San Rafael
II Supporting Calculations I i
Recognition of Deferred Outflows/Inflows at June 30, 2017
Projected Versus Actual Earnings on Investments
(Amounts in 000's)
Meas. Fiscal
Period Year
15/16 16/17
Total
* Calculation of iniital amount for 2015/16 measurement period:
Projected earnings on investments (slide 24), less
Actual earnings on investments (net of investment income, slide 14), equals
Projected earnings less actual earnings
6� 8/14/17
21
Supporting Calculations
Balances of
Deferred
June 30, 2017
Outflows Inflows
$ 780 $ -
780 -
Recognition of Deferred Outflows/Inflows at June 30, 2017
Grand Total
(Amounts in 000's)
Meas. Fiscal
Period Year
15/16 16/17
Total
8/14/17
City of San Rafael
Initial
Amount Recognized in OPEB Expense
Initial
Recog
for FY
Amt
Period
16/17 17/18 18/19 19/20 20/21
$ 975
5
$ 195 $ 195 $ 195 $ 195 $ 195
Amt
Period
195 195 195 195 195
* Calculation of iniital amount for 2015/16 measurement period:
Projected earnings on investments (slide 24), less
Actual earnings on investments (net of investment income, slide 14), equals
Projected earnings less actual earnings
6� 8/14/17
21
Supporting Calculations
Balances of
Deferred
June 30, 2017
Outflows Inflows
$ 780 $ -
780 -
Recognition of Deferred Outflows/Inflows at June 30, 2017
Grand Total
(Amounts in 000's)
Meas. Fiscal
Period Year
15/16 16/17
Total
8/14/17
City of San Rafael
22 City of San Rafael
Balances of
Initial
Amount Recognized in OPEB Expense
Deferred
Initial
Recog
for FY
June 30, 2017
Amt
Period
16/17 16/17 17/18 18/19 19/20
Outflows Inflows
$ 975
n/a
$ 195 $ 195 $ 195 $ 195 $ 195
$ 780 $ -
195 195 195 195 195
780 -
22 City of San Rafael
Supporting Calculations
Components of GASBS 75 OPEB Expense,
(Amounts in 000's)
(118/14/17
23
Supporting Calculations
Components of GASBS 75 OPEB Expense,
Calculation of Projected Earnings on Investments
(Amounts in 000's)
City of San Rafael
Fiscal Year
2016/17
■ Service Cost
$ 766
■ Interest on Total OPEB Liability
3,447
■ Projected earning on investments
(1,132)
■ Employee contributions-
Earnings
■ Administrative expense
7
■ Change in benefits
i nnni
■ Recognition of deferred outflows/inflows
■ Employee contributions
• Experience
-
• Assumptions
-
• Asset returns
195
■ OPEB Expense
3,283
(118/14/17
23
Supporting Calculations
Components of GASBS 75 OPEB Expense,
Calculation of Projected Earnings on Investments
(Amounts in 000's)
City of San Rafael
■ Fiduciary Net Position
Dollar
Expected
Portion of
Projected
(beginning of year)
Amount
Return
Year
Earnings
■ Employer contributions
2,896
— n,ni
i nnni
Q 1 1 Z7
■ Fiduciary Net Position
1!),duZS
1.1-D"/0
1vV io 0
1,1„
(beginning of year)
■ Employer contributions
2,896
7.25%
50%
105
■ Employee contributions
-
7.25%
50%
-
■ Benefit payments
(2,896)
7.25%
50%
(105)
■ Administrative expenses
(7)
7.25%
50%
(0)
■ Projected earnings
1,132
r 1 8/14/17 24 City of San Rafael
I Supporting Calculations i
Components of GASBS 75 OPEB Expense
Calculation of Interest on Total OPEB Liability
(Amounts in 000's)
6�8/14/17 25 City of San Rafael
I Supporting Calculations I i
GASBS 75 Balance Equation
(Amounts in 000's)
■ Measurement date
■ Total OPEB Liability
■ Fiduciary Net Position
■ Net OPEB Liability
■ Deferred inflows of resources
■ Deferred outflows of resources
■ Balance Sheet
Check:
■ Balance Sheet 6/30/16
• OPEB Expense
• Contributions
■ Balance Sheet 6/30/17
8/14/17 26
Fiscal Year Ending
Dollar
Expected
Portion of
6/30/16
$ 48,226
Amount
Return
Year
Interest
■ Total OPEB Liability
$ 48,226
7.25%
100%
$ 3,496
■ Service Cost
766
7.25%
100%
56
■ Benefit payments
(2,896)
7.25%
50%
(105)
■ Total Interest
3,447
6�8/14/17 25 City of San Rafael
I Supporting Calculations I i
GASBS 75 Balance Equation
(Amounts in 000's)
■ Measurement date
■ Total OPEB Liability
■ Fiduciary Net Position
■ Net OPEB Liability
■ Deferred inflows of resources
■ Deferred outflows of resources
■ Balance Sheet
Check:
■ Balance Sheet 6/30/16
• OPEB Expense
• Contributions
■ Balance Sheet 6/30/17
8/14/17 26
Fiscal Year Ending
6/30/16
1 6/30/17
6/30/15
6/30/16
$ 48,226
$ 49,543
15,608
15,757
32,618
33,786
-
(780)
32,618
33,006
$ 32,618
3,283
(2,896)
33,005 1
City of San Rafael
RESOLUTION NO. 14395
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF SAN RAFAEL ADOPTING A RETIREE
HEALTHCARE (OPEB) FUNDING POLICY
WHEREAS, the City of San Rafael is committed to adopting best fiscal practices, in
order to fully use the knowledge, resources and experience available throughout the industry; and
WHEREAS, Public agencies that offer retiree health care benefits (Other Post -
employment Benefits, or "OPEB") to their employees should fund the cost of those benefits in an
equitable and sustainable manner; and
WHEREAS, the City desires to demonstrate accountability and transparency by
communicating all of the information necessary for assessing the City's progress toward meeting
its retiree health care funding objectives.
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of San
Rafael does hereby approve and adopt the following Retiree Healthcare Funding Policy:
Purpose: The purpose of this policy is to provide assurance that the costs of the City's retiree
healthcare will be funded in an equitable and sustainable manner, and that the City will comply
with all relevant federal and state laws and applicable regulatory requirements in the
administration of its plans. It codifies the City's commitment to fund these benefits based on
regular actuarial valuations, and to measure and report them in accordance with generally
accepted accounting principles (GAAP). Adhering to a funding policy that embodies these
funding and accounting principles is a prudent governance practice, and helps achieve
intergenerational equity among those who financially support the plan. It also ensures that
resources are available to fulfill the City's contractual promises to its employees, and minimizes
the chance that funding of these benefits will interfere with the City's ability to provide essential
services to the public.
In order to achieve the purpose of thisop licy, the City will take the following actions:
1.) The City's goal is to fully fund the amount of the ADC (Actuarially Determined
Contribution*) each year. In the event the City is unable to fund the full amount of the ADC in a
given year without borrowing, the Finance Director and City Manager will identify a timeframe
under which to return to full funding.
2.) The Pension-OPEB Subcommittee will review the ADC each fiscal year, and recommend the
level of funding to be considered by the full City Council for adoption in the budget.
* - Under GASB 45, the actuary calculated an "Actuarially Required Contribution," or "ARC." Under
GASB 75, the actuary now calculates an "Actuarially Determined Contribution," or "ADC."
3.) The City supports an ADC that is calculated in a manner that fully funds the long-term costs
of retiree medical benefits, while balancing the goals of:
a) keeping contributions relatively stable; and
b) equitably allocating the costs over the employees' period of active service.
4.) The City will demonstrate accountability and transparency by communicating all of the
information necessary for assessing the City's progress toward meeting its retiree medical
funding objectives. As part of the annual budget adoption process, the Finance Director and City
Manager will report to the City Council on the following:
a) most recent actuarially determined OPEB contribution (ADC)
b) relationship between ADC and budgeted OPEB contribution
c) projected ADC for next three years
d) impact of funding full ADC over the three-year planning horizon
e) any other significant issues associated with funding retiree medical benefits in a
stable and equitable manner as described in #2 above.
5.) The City will implement Governmental Accounting Standards Board Statement No. 75 -
Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions
beginning with the fiscal year ended June 30, 2016.
6.) Staff will monitor changes to and expansions of OPEB funding best practices, as well as any
additional guidance provided by the Government Finance Officer's Association that relate to the
funding retiree medical benefits. Staff will return to City Council with modifications to this
policy as needed.
7.) The City Manager will ensure that any recommended changes to the plans are fully consistent
with the requirements of the Public Employees' Medical & Hospital Care Act (PEMHCA) and
any and all other applicable federal and state regulations, and that the City Attorney's Office be
assigned or other qualified legal counsel be retained to ensure that all public notice, legal and
procedural requirements are fulfilled.
I, ESTHER C. BEIRNE, Clerk of the City of San Rafael, hereby certify that the
foregoing resolution was duly and regularly introduced and adopted at a regular meeting of the
Council of said City on 18th day of September 2017, by the following vote, to wit:
AYES: COUNCILMEMBERS: Bushey, Colin, Gamblin, McCullough & Mayor Phillips
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
. F "t rem
ESTHER C. BEIRNE, City Clerk
4 IftSAN RAFAEL STAFF REPORT APPROVAL
THE CITY WITH AMISSION ROUTING SLIP
Staff Report Author: Mark Moses Date of Meeting: 09/18/2017
Department: Finance
Topic: RETIREE HEALTHCARE REPORTING AND FUNDING
Subject: ACCEPT GOVERNMENTAL ACCOUNTING STANDARDS BOARD STATEMENT NO. 75
ACCOUNTING INFORMATION REPORT ON RETIREE HEALTHCARE AND ADOPT OTHER
POSTEMPLOYMENT BENEFITS (OPEB) FUNDING POLICY
Type: (check all that apply) ❑ Consent Calendar ❑ Public Hearing
N Discussion Item X❑ Resolution ❑ Ordinance
❑ Professional Services Agreement ❑ Informational Report
*If PSA, City Attorney approval is required prior to start of staff report approval process
Was agenda item publicly noticed? ❑ Yes El No I Date noticed: I ❑Mailed ❑Site posted ❑Marin IJ
Due Date Responsibility Description CompletedDate Initial / Comment
DEPARTMENT REVIEW
FRIDAY
Director
Director approves staff
Click here to
❑X
noon
report is ready for ACM,
enter a date.
MM
9/1
City Attorney & Finance
review.
CONTENT REVIEW
'
TUESDAY
Assistant City Manager
ACM, City Attorney &
Click here to
❑X
morning
Finance will review items,
enter a date.
9/5
make edits using track
City Attorney
changes and ask questions
9/11/2017
❑X
using comments. Items will
LG
be returned to the author
Click here to
Finance
by end of day Wednesday.
enter a date.
71
MM
DEPARTMENT REVISIONS
FRIDAY
Author
Author revises the report
9/12/2017
0
noon
based on comments
MM
9/8
receives and produces a
final version (all track
changes and comments
removed) by Friday at
noon.
ACM, CITY ATTORNEY, FINANCE FINAL
APPROVAL
MONDAY
Assistant City Manager
ACM, City Attorney &
Click here to
morning
Finance will check to see
enter a date.
9/11
their comments were
City Attorney
adequately addressed and
9/11/2017
0
sign -off for the City
LG
Manager to conduct the
9/11/2017
Finance
final review.
0
Van Bach
TUES
City Manager
Final review and approval
9/13/2017
M
noon
Jim
9/12