R2011-85 AUTHORIZING CITY MANAGER TO HIRE MILLIMAN CONSULTANTS AND ACTUARIES

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FINANCIAL MANAGEMENT DEPARTMENT #2011- 23 DATE: May 18, 2011 TO: Honorable Mayor and City Council FROM: Ryan P. McCrady, City Manager Ron Neufeld, Finance Director SUBJECT: Actuarial Valuation of Other Post-employment Benefits under GASB 45 SUMMARY RECOMMENDATION: It is recommended by staff that the City Council approve the attached resolution, which authorizes Milliman Consultants and Actuaries to provide consulting services related to the actuarial valuation of other post-employment benefits (OPEB) under GASB 45. The fixed fee for the initial actuarial valuation is $7,800. The fee estimate for the "off' fiscal year calculation is $3,100. BACKGROUND: GASB 45 or GASB Statement 45, is an accounting and financial provision requiring government employers to measure and report the liabilities associated with other (than pension) post-employment benefits (or OPEB). In our case the reported OPEB's would include the post-retirement medical and pharmacy benefits enjoyed by our retirees. GASB 45 was instigated by the Governmental Accounting Standards Board in July 2004 because of the growing concern over potential magnitude of government employer obligations for post-employment benefits. GASB 45 will: • Recognize the cost of OPEB benefits in the period when services are received. • Provide information about the actuarial liabilities for the promised benefits. • Provide information useful in assessing potential demands on future cash flows. GASB 45 applies to the financial statements issued by government employers that offer OPEB and that are subject to GASB accounting standards. Even though our retired employees must pay to participate in our health insurance program, we still need to do an actuarial valuation of those benefits.