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1 <br /> FINANCIAL MANAGEMENT DEPARTMENT <br /> #2008- 60 <br /> DATE: May 28, 2008 <br /> TO: Honorable Mayor and City Council <br /> FROM: John A. Smith, Interim City Man ger' <br /> Ron Neufeld, Finance Director <br /> SUBJECT: Actuarial Valuation of Other Post-employment Benefits under GASB 45 <br /> SUMMARY RECOMMENDATION: <br /> It is recommended by staff that the City Council approve the attached resolution, which <br /> authorizes Milliman Consultants and Actuaries to provide consulting services related to <br /> the actuarial valuation of other post-employment benefits (OPEB) under GASB 45. The <br /> fixed fee for the initial actuarial valuation is $7,500. The fee estimate for the "off' fiscal <br /> year calculation is $3,000. <br /> BACKGROUND: <br /> GASB 45 or GASB Statement 45, is an accounting and financial provision requiring <br /> government employers to measure and report the liabilities associated with other (than <br /> pension) post-employment benefits (or OPEB). In our case the reported OPEB's would <br /> include the post-retirement medical and pharmacy benefits enjoyed by our retirees. <br /> GASB 45 was instigated by the Governmental Accounting Standards Board in July 2004 <br /> because of the growing concern over potential magnitude of government employer <br /> obligations for post-employment benefits. GASB 45 will: <br /> • Recognize the cost of OPEB benefits in the period when services are <br /> received. <br /> • Provide information about the actuarial liabilities for the promised <br /> benefits. <br /> • Provide information useful in assessing potential demands on future cash <br /> flows. <br /> GASB 45 applies to the financial statements issued by government employers that offer <br /> OPEB and that are subject to GASB accounting standards. Even though our retired <br /> employees must pay to participate in our health insurance program, we still need to do an <br /> actuarial valuation of those benefits. <br />