In our day-to-day work, we are awash in numbers. But each of those numbers represents a person — maybe a firefighter, a janitor, a clerk, or a school teacher — who depends on us for accuracy and foresight. As we devise reasonable and measured solutions for our clients, we keep those individuals in mind. Ultimately, our job is to ensure that benefits promised to these workers will be there. Here are some examples of how we’ve done just that.
We have assisted clients over the years in understanding the true meaning of the unfunded accrued liability (UAL) and in properly establishing funding policies to meet the financial needs of their plans. One recent example is a statewide retirement system client that had been using a fixed employer contribution rate. A market downturn resulted in the need for additional contributions. We assisted that client in communicating the need for those added contributions through a cost projection study and presentations to the Board of Trustees, which includes members of the state legislature. The increases were approved.
Another example is with a statewide retirement system client that has a defined benefit pension plan, yet its funding source is from tickets, fines, and court costs. This revenue has declined over the years as the state has significantly decreased the number of state troopers, thereby lowering the number of tickets issued. This decline has deteriorated an already precarious funding level. We prepared an educational program to increase funding sources and presented it to the legislature to make clear the need for a more stable funding source that is adequate to cover the promised benefits.
GASB & OPEB Consulting
All of our current Other Post-Employment Benefits (OPEB) clients coordinate benefits with Medicare and act as secondary payers for Medicare Parts A and B. Our clients have taken different approaches with regard to Medicare Part D, including:
- Receiving the Employer Retiree Drug Subsidy for all Medicare eligible retirees and keeping the drug portion of the plan consistent with prior years,
- Doing away with the drug portion of the plan for Medicare eligible retirees, and
- Various combinations of the two.
We have experience with medical benefit design analysis including costing various proposed plan design changes for some of our larger OPEB clients. These cost proposals generally include several cost saving options as well as different scenarios regarding the coordination of benefits with Medicare Part D and the treatment of the Retiree Drug Subsidy under GASB.