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

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City Council Meeting and Workshop Meeting - June 25, 2007 Page 5 Tom: I don't think the GASB can mandate what the city does in terms of funding. What GASB responsibility is to develop generally accepted governmental accounting principles are that's their sole purpose weather the City funds it that's a completely different question now if the City chooses not to fund and the liability continue to grow City may experience some downgrades in their credit ratings. Louis Rigby: that's the part I don't get because we fund what we have or what we have to do for that particular year. Tom: your on a pay as you go basis and with the baby boomers aging and getting to the point that liability is expected to increase significantly over the next 10 years. The bond holders and the people in the market place buying the bonds want to know what these liabilities are on accrual basis as opposed to modified cash basis which is what we have always prepared now. The GASB45 will not impact the fund financial statements at all, that's the statements that you prepare for budgetary purposes that's modified cash. The only statements that will change are the statements upfront which are full accrual much like a full profit enterprise Louis: Thank You Moser: I guess I'm going to go back to the same thing. If you pay as you go it is our decision weather to fund it or not how does it become a liability? Tom: it's a liability because at any given point in time you have a benefit plan in place and your employees as they work each year they are getting more rights. Moser: Stop. What are the rights to they get? Who's mandating those rights? Tom: It's the benefits that you have in place right now. Dolby: it's the standard benefits that your getting for health care retiree health care implied. Moser: implied? Dolby: yes sir. Joerns: I don't think he's trying to answer in the terms that you couldn't change it every year. Joerns; that could be your management tool, I'm going to look at this every year and every year I'm going to do something different or every third year or whatever. Moser: Right now that liability is $375,000 dollars. That's the actual cost. Dolby: that's not the liability that's actual cost yes somewhere about there. Joerns: snapshot in time with that exposure under those current benefit plans your management tool besides the others discussed could be every year I'll look at the number every year, I'll do something different ifI need to or every third year, but I didn't want to get hung up on the promised benefits because we don't have a contract with the employees regarding that and that could be the management tool that this would