Friday, September 11, 2009
Committee Votes to Fund Retiree Benefits
By an 8-1 vote, the Financial Advisory Committee voted Thursday to recommend modifying the proposed FY 2010 budget--by earmarking $611K for retiree healthcare benefits, with any surplus ($400K?) going into a new "designated retiree fund." According to City Treasurer Nancy Wilson, the $611K is this year's payment towards the City's total $6.7 million in unfunded (OPEB) liabilities--required to be quantified/accounted for (the first time this year) by new accounting regulations (GASB). Wilson added this is a result of the Sarbanes-Oxley Act of 2002--to bring greater transparency to accounting. The Committee also is to further research establishing an irrevocable trust (instead of the retiree fund) for next year's budget (2011). Wilson: "It won't really count as funded (GASB 45) unless a trust is set up . . . could damage our (City's) credit rating (unless that's done)." Chairman Zunk: "My take is . . . still some uncertainty . . . can't turn a blind eye, either . . . pretend it will go away . . . we owe the $6.7 million . . . set aside cash now . . . learn more about irrevocable trusts." Kant: "The real issue is the benefit itself (retiree health) . . . need to look at that." Mixon: "Possibly-- we could stop it for future hires . . . but we're obligated to current employees." Councilman Kingrea voted no, favoring starting the irrevocable trust immediately-- "to get its benefits" (better credit rating) and guard against "raiding" the new fund for other political purposes. Financial Reporter Fogarty summed up: "The Mayor . . . thought GASB 34 would go away too . . . It didn't . . . I think we're stuck."