AGENDA #6
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to: |
Roger L. Stancil, Town Manager |
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from: |
Anissa N. Graham-Davis, Assistant Human Resources Director Kay Johnson, Finance Director |
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subject: |
Retiree Medical Benefits |
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date: |
April 18, 2007 |
The purpose of this report is to propose that the staff be authorized to research the issue of potential actions for employee benefits costs in light of the new accounting principles that require municipalities to record their funding liabilities.
The Governmental Accounting Standards Board (GASB) has set a new rule that requires a municipality to report its estimated retiree benefits liability over the next 30 years. This rule does not require that governments fund this rule but that governments acknowledge the commitments made to employees.
Some governments are strategizing to deal with this liability. Up to now, governments have taken the pay-as-you-go approach.
Cavanaugh Macdonald Consulting, LLC conducted an actuarial study for the Town and determined that the Town’s liability would be $45 million dollars.
We would like the opportunity to conduct a formal thorough review of the Town’s employee benefits programs and cost. We will also research and analyze the assumptions made in the actual study. This would allow the staff time to research and present findings for the Council’s consideration. The current process of negotiating contract renewals for medical insurance is now underway and will be completed for inclusion in the upcoming budget.
We recommend that the staff take time to conduct research and present their findings, including options that the Council may wish to consider, by the fall of 2007, with implementation of any approved changes in the 2008-09 budget year.