GASB 43 & 45 - Other Post Employment Benefits Bob Scott, City of Carrollton GFOAT Fall Conference November 16, 2006 San An...
OPEB IS ONE PIECE OF A BIGGER ISSUE-AGING WORKFORCE & INFRASTRUCTURE <ul><li>What age is your community? </li></ul><ul><ul...
Rapid Growth Catches Up (AKA Why “Pay As You Go” Doesn’t Work) <ul><li>Number of Retirees 1996 vs. 2005 </li></ul><ul><ul>...
Rapid Growth Catches Up (AKA Why “Pay As You Go” Doesn’t Work) <ul><li>Percentage Retirees to Active-1996 vs. 2005 </li></...
TEXAS IS UNIQUE <ul><li>Strong, Widely Used Statewide Retirement Plan </li></ul><ul><li>Rapid Growth in the Past 40 Years ...
What Does This Mean? <ul><li>Expect “Sticker Shock”-Rule of Thumb is for ARC to be 5 to 7 times PAYG Amount but our rapid ...
What Does This Mean? <ul><li>Stinginess however may mean an older workforce and higher active employee health costs as emp...
Joint RFP for Actuarial Services <ul><li>Coordinated by NCTCOG </li></ul><ul><li>Reduces actuarial costs through: </li></u...
Joint RFP for Actuarial Services <ul><ul><li>Sharing of Information and Resources </li></ul></ul><ul><ul><ul><li>Summarize...
WHAT’S NEXT FROM GASB? <ul><li>Current Project on Pension Disclosures-Conforming Changes </li></ul><ul><ul><li>Designed to...
WHAT’S NEXT FROM GASB? <ul><li>Research Project on Pension Accounting and Reporting </li></ul><ul><ul><li>Broad project to...
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  • Texas in 1970 was 11.2 million in population and was the fourth most populous state. Today it is estimated to be right at 23 million, the second most populous state. While Texas can grow at this rate for a long time, cities within the state will grow at a much faster rater and then hit build out. Toddler-relatively small today but poised for explosive growth in the next 10 to 20 years. Teenager-has grown rapidly for the past several years and will continue to grow rapidly for the next several years. Has not necessarily absorbed all the growth yet. Young Adult- most but not all of your growing is over. Growth has been absorbed. Mature Adult-At or near build out-moving rapidly into a maintenance and redevelopment mode. Most of the growth that made it the city it is today is at least 20 years in the past. Carrollton is somewhere between young and mature adult. Population in 1970 was 14,000 with 104 employees Today we are just under 120,000 with over 800 employees Vast majority of employees were added in the 70s and 80s.
  • Bob Scott Handout.ppt

    1. 1. GASB 43 & 45 - Other Post Employment Benefits Bob Scott, City of Carrollton GFOAT Fall Conference November 16, 2006 San Antonio, TX
    2. 2. OPEB IS ONE PIECE OF A BIGGER ISSUE-AGING WORKFORCE & INFRASTRUCTURE <ul><li>What age is your community? </li></ul><ul><ul><li>Toddler </li></ul></ul><ul><ul><li>Teenager </li></ul></ul><ul><ul><li>Young Adult </li></ul></ul><ul><ul><li>Mature Adult </li></ul></ul><ul><li>All cities are finite in terms of their size and while they can grow very rapidly, their growth is capped by their geographic size. </li></ul><ul><li>Rapid growth followed by build out has many issues that cities are now grappling with. </li></ul>
    3. 3. Rapid Growth Catches Up (AKA Why “Pay As You Go” Doesn’t Work) <ul><li>Number of Retirees 1996 vs. 2005 </li></ul><ul><ul><li>Carrollton 59 vs. 204 246% </li></ul></ul><ul><ul><li>Plano 114 vs. 323 183% </li></ul></ul><ul><ul><li>Arlington 353 vs. 751 113% </li></ul></ul><ul><ul><li>Cedar Hill 9 vs. 43 377% </li></ul></ul><ul><ul><li>Katy 6 vs. 22 267% </li></ul></ul><ul><ul><li>Friendswood 12 vs. 38 217% </li></ul></ul><ul><ul><li>Round Rock 14 vs. 63 350% </li></ul></ul><ul><ul><li>College Station 47 vs. 122 160% </li></ul></ul><ul><ul><li>Tyler 201 vs. 300 49% </li></ul></ul><ul><ul><li>Lubbock 503 vs. 707 41% </li></ul></ul><ul><li>System-wide TMRS is adding about 2000 retires a year with total retirees growing from 14,000 to 30,000 in ten years. </li></ul>
    4. 4. Rapid Growth Catches Up (AKA Why “Pay As You Go” Doesn’t Work) <ul><li>Percentage Retirees to Active-1996 vs. 2005 </li></ul><ul><ul><li>Carrollton 6.3% vs. 24.7% </li></ul></ul><ul><ul><li>Plano 8.1% vs. 16.5% </li></ul></ul><ul><ul><li>Arlington 17.0% vs. 33.1% </li></ul></ul><ul><ul><li>Cedar Hill 6.2% vs. 16.3% </li></ul></ul><ul><ul><li>Katy 10.5% vs. 18.5% </li></ul></ul><ul><ul><li>Friendswood 9.2% vs. 21.6% </li></ul></ul><ul><ul><li>Round Rock 4.1% vs. 9.3% </li></ul></ul><ul><ul><li>College Station 7.6% vs. 16.4% </li></ul></ul><ul><ul><li>Tyler 30.6% vs. 51.0% </li></ul></ul><ul><ul><li>Lubbock 35.2% vs. 47.4% </li></ul></ul>
    5. 5. TEXAS IS UNIQUE <ul><li>Strong, Widely Used Statewide Retirement Plan </li></ul><ul><li>Rapid Growth in the Past 40 Years </li></ul><ul><ul><li>Slowing or Stopped for Some </li></ul></ul><ul><ul><li>Just getting Started for Others </li></ul></ul><ul><ul><li>Overall, the Ratio of Retirees to Active Employees is Still Small but Will Grow Rapidly </li></ul></ul><ul><li>Relatively Weak Union Environment </li></ul><ul><li>Very Few Formal OPEB Plans </li></ul><ul><li>Huge Diversity Among Cities in the Level of Benefits Provided </li></ul>
    6. 6. What Does This Mean? <ul><li>Expect “Sticker Shock”-Rule of Thumb is for ARC to be 5 to 7 times PAYG Amount but our rapid growth in Texas may make that larger for many of us </li></ul><ul><li>Expect the Actuarial Liability (RSI Disclosure only) to be 10 to 20 times the ARC </li></ul><ul><li>Stingy cities that make retirees pay a significant part of their premium will fare the best </li></ul>
    7. 7. What Does This Mean? <ul><li>Stinginess however may mean an older workforce and higher active employee health costs as employees determine that they cannot afford to retire </li></ul><ul><li>Cities choosing not to fund will see their PAYG amounts escalate at the same time other expenses such as ED incentives, infrastructure etc. sky rocket </li></ul>
    8. 8. Joint RFP for Actuarial Services <ul><li>Coordinated by NCTCOG </li></ul><ul><li>Reduces actuarial costs through: </li></ul><ul><ul><li>800 pound gorilla (purchasing volume) </li></ul></ul><ul><ul><li>Purchasing efficiencies </li></ul></ul><ul><ul><ul><li>Standardize actuarial methods </li></ul></ul></ul><ul><ul><ul><li>Provide for minimum quality levels for data provided to actuaries </li></ul></ul></ul><ul><ul><ul><li>Same basic contract for all participants </li></ul></ul></ul><ul><ul><ul><li>Allow actuary to plan and hopefully smooth work flows </li></ul></ul></ul>
    9. 9. Joint RFP for Actuarial Services <ul><ul><li>Sharing of Information and Resources </li></ul></ul><ul><ul><ul><li>Summarize results for all participants </li></ul></ul></ul><ul><ul><ul><li>Contain policy options/recommendations based on the benchmarked data </li></ul></ul></ul><ul><ul><ul><li>Could serve as a starting point for state wide retiree plans, medi-gap plans etc. </li></ul></ul></ul><ul><ul><li>More Information is available at: </li></ul></ul><ul><ul><ul><li>Nctcog.org/aa/actuary.asp or nctcog.org under hot topics click actuarial shared services </li></ul></ul></ul>
    10. 10. WHAT’S NEXT FROM GASB? <ul><li>Current Project on Pension Disclosures-Conforming Changes </li></ul><ul><ul><li>Designed to make the disclosures between OPEB and Pensions consistent </li></ul></ul><ul><ul><ul><li>Funded status in the footnotes </li></ul></ul></ul><ul><ul><ul><li>Aggregate must use EAN for disclosure purposes </li></ul></ul></ul><ul><ul><ul><li>Enhanced FN disclosure on actuarial methods used </li></ul></ul></ul><ul><ul><ul><li>Additional disclosure if cost sharing plan does not </li></ul></ul></ul><ul><ul><li>ED-December 2006 & Final Statement-May 2007 </li></ul></ul>
    11. 11. WHAT’S NEXT FROM GASB? <ul><li>Research Project on Pension Accounting and Reporting </li></ul><ul><ul><li>Broad project to determine the effectiveness of GASB 25 & 27 </li></ul></ul><ul><ul><li>Phase I-Fact Finding </li></ul></ul><ul><ul><li>Phase II-Effectiveness of Current Standards </li></ul></ul><ul><ul><li>Decision on Whether to Add a Pension Project to the Technical Agenda (May 2008) </li></ul></ul>
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