ITEM:		CONSENT CALENDAR
9.	RECEIVE GOVERNMENT ACCOUNTING STANDARDS BOARD STATEMENT NO. 75 ACCOUNTING AND FINANCIAL REPORTING FOR POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
Meeting Date:			February 24, 2022	Budgeted:	N/A
From:			David J. Stoldt,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Suresh Prasad	Cost Estimate:	N/A
General Counsel Review: N/A
Committee Recommendation: The Administrative Committee reviewed this item on February 16, 2022 and recommended approval.
CEQA Compliance: This action does not constitute a project as defined by the California Environmental Quality Act Guidelines Section 15378.

SUMMARY: In July 2004, the Governmental Accounting Standards Board (GASB) issued Statement Nos. 43 & 45, establishing financial reporting requirement for post-employment benefits other than pensions. The District currently provides health insurance benefits as a post-employment benefit and has complied with GASB 43 & 45 requirements by including current and future cost information in its financial statements beginning with Fiscal Year 2009-2010. Previously, for GASB 45 purposes, District used the actuarial firm Milliman, Inc. to compile the required data using the alternative measurement report method.

In June 2015, GASB issued Statement No. 75 replacing GASB 45, financial reporting requirement for post-employment benefits other than pensions, which now includes information with respect to the total obligation to provide future retiree health and welfare benefits with fiscal year beginning June 15, 2017. Since this is a report that requires a full actuarial report, District used Precision Actuarial, Inc. to prepare this report to meet GASB Statement No. 75 for the fiscal year ending June 30, 2021, attached as Exhibit 9-A. It is noteworthy to mention that the GASB 75 standard only applies to reporting the liability and does not stipulate any requirement for funding the liability.

As reported in the Executive Summary, page 3, the District’s Net OPEB Liability as of June 30, 2021 is estimated at $4,533,952. In comparison, District’s Net OPEB Liability as of June 30, 2020 was estimated at $4,116,712.

The District’s annual expense of $337,730 would fully fund the current and future costs amortized over time. In FY 2020-2021, the District paid premium contributions towards medical coverage for thirteen retirees in the amount of $126,446. This actual cost would be deducted from any contribution made for the year. For example, if the District had fully funded its contribution in FY 2020-2021, the $126,446 would have been deducted from the $337,730 resulting in a net contribution of $211,284. It should be noted that both current and future costs must be recalculated on an annual basis based on then current employee data and District benefit levels, so the contribution amounts may vary somewhat each subsequent year. The District can elect to either partially fund, fully fund or continue to fund the costs on a pay-as-you-go basis. The District’s budget in the past has included funds for pay-as-you-go basis. The District budget starting with fiscal year 2018-2019 has also included an additional $100,000 set aside towards OPEB reserve funds. The OPEB reserve balance as of 06/30/2021 was $300,000.

RECOMMENDATION: The Administrative Committee recommends that the Board receive the GASB 75 OPEB Valuation Report prepared by Precision Actuarial, Inc.

BACKGROUND: In July 2004, GASB issued Statement Nos. 43 & 45, establishing financial reporting requirements for post-employment benefits other than pensions. The District provides health insurance as a post-employment benefit and is required to comply with GASB 43 & 45 and include the required information in its audited financial statements beginning in FY 2009-10.

In June 2015, GASB issued Statement No. 75 replacing GASB 45, financial reporting requirement for post-employment benefits other than pensions, which now includes information with respect to the total obligation to provide future retiree health and welfare benefits with fiscal year beginning June 15, 2017.

The main thrust of GASB OPEB standard is to require that public-sector employees recognize the cost of other post-employment benefits over the service life of their employees rather than on a pay-as-you-go basis. While the liability amount must be included in each entities annual audited financial statements, the GASB statements do not require that the amount actually be funded. Government entities can either partially fund, fully fund or continue to fund the costs on a pay-as-you-go basis.

Beginning with the fiscal year 2018-2019 budget, District has started setting aside funds towards the unfunded pension and other postemployment benefits (OPEB). With each budget cycle, staff will continue to recommend adding additional funds to these reserve accounts.

EXHIBIT

9-A GASB 75 OPEB Valuation Report

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