Amador County – The Ione City Council heard a report on its financial outlook regarding Retired Employee Health Benefits last week, learning it was liable for 779,000 dollars. Geoffry Kischuk of the Government Accounting Standards Board, reported his analysis and said the amount was relatively low. He said it was good for the city to start the study process of its Retiree Health Benefits liability, noting that the city must have a plan in place in two years. He said the city should plan to account for retirement health benefits while people are working, to accrue liability. The Government Accounting Standards Board, a non-profit organization based in Connecticut, allows up to a 30-year transition to “pay-as-you-go” and accumulate accrued liability. He said the city must reflect the new accounting standards by June 30, 2010. Kischuk said he made an actuarial model of the city to find its current liability on retiree health, using data from city employees to make assumptions. He said if city accruing benefits were due now, the city would be due to pay $779,000 dollars. Now it can be accrued over 30 years. Kischuk said the city had several options to plan for future retiree health benefits. The city could establish its own retirement trust, or invest in longer term assets, which can give advanced credit and make advanced payment numbers smaller. But, in long-term investing, funds are committed permanently. He said prefunding retirement health benefits has advantages, including improved bond ratings, making costs responsive to payroll, and reducing long-term cash expense due to higher investment income. City Manager Kim Kerr said a past city council established the current Retirement Health Benefits plan but did not realize the implications. The city is now paying $4,800 dollars a year. She recommended the city develop a committee to look at management options and she said there are ways to reduce costs. She said a committee could make an agreement between management and labor, to plan for retirement and also get employees to set aside their own money. Kerr said the city should “get the bargaining units involved because it is negotiable.” Story by Jim Reece. This email address is being protected from spambots. You need JavaScript enabled to view it.
Sunday, 07 December 2008 23:51
Ione City Council
Amador County – The Ione City Council heard a report on its financial outlook regarding Retired Employee Health Benefits last week, learning it was liable for 779,000 dollars. Geoffry Kischuk of the Government Accounting Standards Board, reported his analysis and said the amount was relatively low. He said it was good for the city to start the study process of its Retiree Health Benefits liability, noting that the city must have a plan in place in two years. He said the city should plan to account for retirement health benefits while people are working, to accrue liability. The Government Accounting Standards Board, a non-profit organization based in Connecticut, allows up to a 30-year transition to “pay-as-you-go” and accumulate accrued liability. He said the city must reflect the new accounting standards by June 30, 2010. Kischuk said he made an actuarial model of the city to find its current liability on retiree health, using data from city employees to make assumptions. He said if city accruing benefits were due now, the city would be due to pay $779,000 dollars. Now it can be accrued over 30 years. Kischuk said the city had several options to plan for future retiree health benefits. The city could establish its own retirement trust, or invest in longer term assets, which can give advanced credit and make advanced payment numbers smaller. But, in long-term investing, funds are committed permanently. He said prefunding retirement health benefits has advantages, including improved bond ratings, making costs responsive to payroll, and reducing long-term cash expense due to higher investment income. City Manager Kim Kerr said a past city council established the current Retirement Health Benefits plan but did not realize the implications. The city is now paying $4,800 dollars a year. She recommended the city develop a committee to look at management options and she said there are ways to reduce costs. She said a committee could make an agreement between management and labor, to plan for retirement and also get employees to set aside their own money. Kerr said the city should “get the bargaining units involved because it is negotiable.” Story by Jim Reece. This email address is being protected from spambots. You need JavaScript enabled to view it.
