04272010 GASB 45 EVALUATION PRESENTATIONPresentation to City Council
April 27, 2010
Lyndon S. Remiss, CPA, CIA
City Auditor
• To determine if the valuation of the
City/Schools' Governmental Accounting
Standards Board Statement 45 (GASB 45)
liability and the underlying assumptions
are reasonable.
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1. Determined the employee/retiree census data
provided to Mercer by the Consolidated
Benefits Office to be materially accurate.
2. Determined that the Actuarial Accrued Liability
(AAL) and normal cost calculations presented
in Mercer's valuation dated April 19, 2010 are
reasonable. In addition, the resulting ARC and
incremental cash amounts needed to fully fund
the ARC is reasonably stated as well.
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3. Determined that the actuarial assumptions
utilized in the valuation are reasonable and
agree to supporting documentation.
4. Recomputed the smoothing calculation made
by Mercer to state the Actuarial Value of Assets
(value of our contributions) and verified
balances to the City's VACO/VML Pooled
OPEB account when appropriate without
exception.
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• Identified an issue related to the identification of Double
Employee subscribers resulting from the reversal of
subscriber and spouse designations
(i.e., the subscriber was identified as the spouse and the
spouse as the subscriber).
• The effect of this finding was a reduction to the Actuarial
Accrued Liability (AAL) of $582,657 and an increase in
the Normal Cost of $28,118. Net effect to the ARC was a
decrease of $8,655.
• Mercer made the necessary changes and the revised
amounts are presented in the Postretirement Benefit
Valuation Report dated April 19, 2010.
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Percentage of Retiree Spouses Electing Coverage
In our prior year review of the GASB 45 Actuarial
Valuation dated April 2, 2009 we noted the
f
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As a result of our prior year finding, Mercer reduced the spousal participation
assumption rate from 48% in the prior year to 32% for the current valuation.
ARC $18, 600, 000 $17, 700, 000 $900, 000 5%
Less: PayGo $9, 800, 000 $9, 800, 000 $0 0%
Amount to
Fu I ly Fund $8, 800, 000 $7, 900, 000 $900, 000 10%
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Dollar Impact of Change
02/28/09
03/31 /10
$ 8,894,449
$17, 328,448
$ 6, 648, 986
$19,061,851
($2,245,463)
$1, 733, 403
-25.2%
10%
The unrealized loss of $2.2 million reported in last year's
review has been fully recovered and the market value of the
trust's assets as of March 31, 2010 was $19, 061, 851.
Comparison of VACO/VML OPEB Trust
As with the spousal assumption, we recommend
the City/Schools Benefits Executive Committee
continue to work with the actuary to monitor and
evaluate the City's actual data against the
general and/or VRS actuarial assumptions. If
warranted, the actuarial assumptions utilized in
future valuations should be adjusted
accordingly.
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The valuation of the City/Schools' GASB 45
liability and the underlying assumptions are
reasonable as presented in the revised version
of the valuation dated April 19, 2010.
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