AgdaPkt 2006-01-09 - Laserfiche WebLink

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Attachment III City of Redwood City Recommendations to Management For the year ended June 30, 2005 3. New Pronouncements Observation The Governmental Accounting Standards Board (GASB) had issued GASB Statement No. 43, Financial Reporting for Postemployment Benefit Plans Other than Pension Plans and GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits other than Pensions which the City has to implement in fiscal years ending June 30, 2007 and 2008 respectively. These statements will require the disclosure of the liability related to Other Post Employment Benefits (OPEB). GASB's financial reporting and accounting requirements allows the unfunded liabilities to not be recorded, but to be amortized up to thirty years for OPEB plans. Although these unfunded liabilities are not recorded and not presented on the face of the financial statements, these amounts are disclosed in the Notes to the Financial Statements and in Required Supplementary Information as required by GASB. In addition, these disclosures also present a description about the Plans, actuarial assumptions used in the Plans, contributions actuarially required and made, and a three year funding progress (or lack of progress) in the Plans. Recommendation We recommend that the City prepare for the implementation of these statements by obtaining an actuarial study to determine the City's liability. In addition, the City should decide, by Council action, whether the liability will be funded or if the City will continue to utilize the pay-as-you-go method for these expenditures. Citv Response The City has adopted a budget for the cost of an OPEB actuarial study and is in the process of hiring a consultant to perform the actuarial study. The City Council will decide and adopt the funding mechanism for its OPEB plan through the budget process. 2