5.1. ERMUSR 06-14-2016 - Laserfiche WebLink

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For more information regarding the liability of the City with respect to its employees, please reference "Note 4, OTHER INFORMATION, D. Pension Plans" of the City's Comprehensive Annual Financial Report for fiscal year ended December 31, 2014, an excerpt of which is included as Appendix IV of this Official Statement. (The City's Comprehensive Annual Financial Report for the fiscal year ended December 31,2015 is not yet available.) GASB 68 In June 2012, the Government Accounting Standards Board (GASB) issued Statement No. 68, Accounting and Financial Reporting for Pensions (GASB 68). This statement revises existing standards for measuring and reporting pension liabilities for pension plans provided to City employees and requires recognition of a liability equal to the Issuer's proportionate share of net pension liability, which is measured as the total pension liability less the amount of the pension plan's fiduciary net position. GASB 68 became effective for the City's fiscal year ended December 31, 2015, and the City anticipates some level of impact on its financial statements for the fiscal year ending December 31,2015. Sources: City's Comprehensive Annual Financial Reports. Other Post-Employment Benefits The Governmental Accounting Standards Board (GASB) has issued Statement No. 45, Accounting and Financial Reporting by Employers for Post-employment Benefits Other Than Pensions (GASB 45),which addresses how state and local governments must account for and report their obligations related to post- employment healthcare and other non-pension benefits(referred to as Other Post Employment Benefits or "OPEB"). The City provides other postemployment health insurance benefits for retired employees through two defined benefit plans: the Municipal Retirees Health Plan (MRHP), a single-employer plan; and the Utilities Retirees Health Plan (URHP), a multi-employer plan. Each plan provides benefits for eligible retirees and their dependents through the City's group health insurance plans,which cover both active and retired members. Since the premium is a blended rate determined on the active and retiree population,the retirees are receiving an implicit rate subsidy. The implicit rate subsidy is the additional cost of health insurance to current employees and the City as a result of the higher cost of providing health insurance to retirees. Contribution requirements are reviewed at the time changes are made to the plans. Benefit provisions for MRHP are established and amended by the City, while the Utility has been delegated authority to establish and amend benefit provisions for URHP. Eligible retirees receiving benefits are required to pay 100%of the total premium. The City's annual OPEB cost for each plan is calculated based on the annual required contribution(ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB 45. The ARC represents the level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The URHP has elected to calculate the ARC and related information using the alternative measurement method permitted for employers in plans with fewer than one hundred total plan members. Components of the annual OPEB cost, the amount actually contributed to the plan, and the changes in the net OPEB obligation to the plan for the fiscal year ended December 31,2014 are as follows: MRHP URHP Annual required contribution $125,720 $ 10,693 Interest on net OPEB obligation 11,330 1,802 Adjustment to ARC (16,602) (2,605) Annual OPEB cost(expense) $120,448 $ 9,890 Contributions made (39,599) 0 Increase in net OPEB obligation $ 80,849 $ 9,890 Net OPEB obligation—beginning of year 283,261 45,042 Net OPEB obligation—end of year $364,110 $54,932 -33 - 151