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

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City Council Meeting and Workshop Meeting - June 25, 2UU7 Page 6 be every place every year snapshot you might choose to do something different that does exist as well as funding or not to fund again you would be producing these statements explaining the liability the trend. Tom: any changes in the plan would be footnoted on that trend schedule exactly like your pension plan is now. Moser: my next question is this GASB regulation came to be because of pension funds more than the medical insurance correct? Is that what drove it? T om: I think initially we had the retirement disclosures and then industry 10 or 15 years ago, industry went through this very same process where profit corporations had to do the same thing. It goes back to the aging population rising health care cost and what that impact going to be that's buying the City of La Porte bonds. Moser: if we decide not to fund it in August then it is not liability. Tom: you can change the plan. Mosteit: what were talking about then is GASB is an information tool for the future bond people that buy bonds when the city is selling. Tom: they are rules setting. Mosteit: what type of obligation? No way a mandate for any liability to the city for any future payments outside of the window that we fund. Tom: all were trying to do is capture what the estimated liability as the snapshot in time for City of La Porte benefits. Mosteit: I thinks that's been the real question about it whether its no liability to the city or the future. It just gives somebody else an idea on what and how solvent the city is or what their capabilities are when their selling these bonds Tom: over a period of time if that liability continues to grow and its not addressed then it might show that the financial strength might not be as strong as we thought it was. Mosteit: it will just affect the bond rating? Tom: that's correct. Mayor: the accrual is the function of our current policy. Tom: yes sir. Mayor: when our policy changes the accrual changes; if policy doesn't change the accrual is going to be a reflection of what policy is. Tom: in my understanding with a lot of accrual studies you have options for the difference scenarios. If you want to look at a defined contribution or look at grand fathering clause they'll run all those assumptions for you at the time they do the initial study.