2007-06-25 Regular Meeting and Workshop Meeting (2)

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City Council Meeting and Workshop Meeting - June 25, 2UU7 Page 4 Mayor: so that would be a good question for auditors ; I thought somewhere I picked up that some people were doing it if they weren't funding but they were going to footnote what the liability would be not have it as actual financial impact. Tom Pederson: I believe that there is a provision in the state law that says that if the City intends to provide these benefits going forward there will be some disclosure for required. Unfortuntaley, we don't know what exactly the disclosures are at this point because the comptroller's office has not developed the rules yet so were not really certain Mayor: were not any more at risk than not doing it Tom Pederson: no sir; I look at the actuarial study as a management tool; its an awareness; "here's where our benefits are presently", "here's what we can expect that's going to cost" and at least this way you are not - weather you fund or don't fund GASB45 does not really address that. It just says the liability needs to be on the accrual basis statements and there is some disclosures required that will show the funding progress much like the retirement plan disclosures are; it's a good management tool so you won't be blind sided in the future; Louis Rigby: the footnote of liability is that just for the current year? Tom Pederson: it's trend information; 3, 5 year trend exactly like your schedule and the audit report for your pension disclosures; what the rating agencies and what creditors are going to be wanting to see is how the City is progressing in managing those liabilities their looking for. Trend information is what they are looking for Louis Rigby: I still don't understand how we can be held accountable for what mayor may not happened five years from now, ten years from now. Tom Pederson: I'll try to answer that... the employees that you have that are working here now they earn these benefits. Louis Rigby: stop right there, we have employees that worked here 25 and 30 years that earned benefits that no longer get those benefits so who is to say that the ones that are working now that are quote unquote earning benefits are going to have them 5 years from now. Tom Pederson: at any point in time what the study tries to measure is as of a particular date with the employees that you have on board and have retired what the benefits that were promised to them as of that date what's the City's expected estimated liability for those benefits. Sure it can change, you can come back tomorrow night or next council meeting and change the benefits structure that's going to change the liability. It's a snapshot in time and long as those benefits don't change you'll see trend information with the trend information will be foot noted every time you make modifications to the plan. Louis Rigby: if the trend is that this dollar amount increases 5% . 10% every year that 20 years from now its going to take "X" amount of dollars to fund it as it is today and then the City is going to be required to come up with that much money to put in escrow or some sort of account to make sure the money is there 20 years from now?