|
March 2008 - DPAC, GASB, the Board, and Us -- A Drama in Three Acts |
 |
 |
 |
By Mitra Moassessi
ACT I:
Under the new GASB 45 standards, state and local government employers are required to measure and disclose an amount for the expected annual cost of OPEB's -- Other Post Employment Benefits -- on the accrual basis of accounting. OPEB's are retirement benefits other than pensions, such as health care, and on September 26, 2007, DPAC, the District Planning and Advisory Council, approved a recommendation to form a GASB 45 task force for the purpose of educating the college community about GASB 45, and developing a recommendation regarding its requirements.
At an October 3, 2007 DPAC meeting, the members of DPAC agreed on the Task Force's mission: It should hold regular meetings to study the issue of unfunded retiree benefits and GASB 45, conduct forums for the purpose of educating the college community, recommend whether to pre-fund or not to pre-fund retiree benefits, and determine alternatives for funding if the decision is made to pre-fund. It was also agreed that the Task Force should be comprised of administration/management and employee groups. DPAC agreed to not include any student representative in the GASB 45 Task Force.
However, at the November 14, 2007 DPAC meeting, it was reported that the Board of Trustees had already voted to pre-fund GASB 45, and that the task force's mission would now be to decide how to fund GASB 45 and how much to fund, rather than discuss whether to do so in the first place. Since the charge of the GASB Task Force was changed outside of DPAC, the Faculty Association decided to withdraw from the task force in protest.
ACT II:
On February 27, 2008, by a vote of five to three, DPAC approved a motion to accept the following recommendation of the GASB 45 task force:
“The GASB 45 Task Force recommends that the Santa Monica Community College District begin to pre-fund its retiree health benefits obligation. The Task Force recommends an initial contribution of $1.4 million and subsequent annual contributions in the amount of $500,000 over the next four fiscal years. The Task Force also recommends that the College's initial contribution be drawn from the SCCCD (Southern California Community College District) JPA and placed in an irrevocable trust. Lastly, the Task Force also recommends that at the end of the stated five-year period, the District re-evaluate its retiree health benefits liability.”
Voting in favor of the motion were the administration, classified managers, Academic Senate, and students (2 votes). Voting against the motion were the: Faculty Association and CSEA (2 votes).
Why did the task force decide to have an annual contribution of $500,000? The reasons presented were that (1) $500,000 is a good number, and (2) over four years it would add up to $2,000,000, which is the amount the Board of Trustees voted to set aside as designated reserve for GASB.
At a time that the State of California is facing a 16 billion dollar budget shortfall over the next two years, could the college really afford to set aside $500,000 each year for the next four years, we asked. What protects the retiree health benefits now — and always — is our contract , and setting aside $500,000 from unrestricted General Fund, in addition to what the District already spends on retiree health benefits, is removing money that could — and should — be spent on other priorities.
ACT III:
At the March 10 Board of Trustees meeting, the DPAC recommendation on pre-funding was discussed extensively. The Board approved a motion (6 -1) to establish an irrevocable trust with CALPers, with an initial deposit of $1.4 million of funds currently on deposit with the Southern California Community College District Joint Powers Authority (SCCCD JPA).
Future contributions to this fund, however, will be decided each year at the time that the annual budget is adopted. No further decision has been made on the $2,000,000 set aside in the designated reserve for GASB funding.
|
|
|
|
