HomeMy WebLinkAboutResolutions - 2004.09.09 - 27730August 5, 2004
REPORT (misc. 104170)
BY: PERSONNEL COMMITTEE, GREGORY JAMIAN, CHAIRPERSON
RE: DEPARTMENT OF MANAGEMENT AND BUDGET — TRANSFER A PORTION
OF GENERAL FUND BALANCE TO THE OAKLAND COUNTY RETIREES'
HEALTH CARE TRUST
TO: THE OAKLAND COUNTY BOARD OF COMMISSIONERS
Chairperson, Ladies and Gentlemen:
The Personnel Committee having reviewed MR 404170 on July 28, 2004 Reports with
the recommendation the Resolution be adopted.
Chairperson, on behalf of the Personnel Committee, I move the acceptance of the foregoing
report.
PERSONNEL COMMITTEE
Personnel Committee Vote:
Motion carried on unanimous roll call vote with Coleman absent
July 22, 2004
MISCELLANEOUS RESOLUTION 104170
BY: FINANCE COMMITTEE, CHUCK MOSS, CHAIRPERSON
IN RE: DEPARTMENT OF MANAGEMENT AND BUDGET — TRANSFER A
PORTION OF GENERAL FUND BALANCE TO THE OAKLAND COUNTY
RETIREES' HEALTH CARE TRUST
TO THE OAKLAND COUNTY BOARD OF COMMISSIONERS
Chairperson, Ladies and Gentlemen:
WHEREAS the Oakland County Retirees' Health Care Trust
fund, reported an Unfunded Accrued Liability (UAL) of
$335.4 million as of September 30, 2003, with the current
budget based on the assumption that the UAL will be
eliminated over 26 years; and
WHEREAS the Oakland County Retirement Board has been
informed by their contracted actuary firm, Gabriel, Roeder,
Smith & Company, that the Actuarial Standards of Practice
have changed; and
WHEREAS in June 2004, the Government Accounting
Standards Board (GASB) issued statement 43, Financial
Reporting for Postemployment Benefit Plans Other Than
Pension Plans, which will require new reporting of UAL for
retiree health care and other post employment benefits by
the end of Fiscal Year 2007; and
WHEREAS Gabriel, Roeder, Smith & Company has further
informed the Oakland County Retirement Board that the
current method of calculating the County's retiree health
care contribution "_ no longer comply with Actuarial
Standards of Practice and should not be used to comply with
new Government Accounting Standards Board financial
reporting requirement"; and
WHEREAS the Retirement Board voted on June 24, 2004 to
change their actuarial assumptions used in the calculation
of retiree hospitalization to come into compliance with the
new standards; and
WHEREAS specifically the Retirement Board approved
changing the assumed rates of medical inflation, increasing
the amortization period for elimination of the UAL to 40
years, and changing the method of premium rate development
to adjust for age grade premiums and claims analysis; and
WHEREAS the change in actuarial assumptions will
increase the County's contribution to retiree health care
by approximately $8 million per year; and
WHEREAS as one option to fund this increased
contribution, the County could increase the fringe benefit
rate charged to all County funds for retirees' health care
from 15.04% currently to 19.34%, an increase of 28.6%; and
Finance Committee Vote:
Motion carried on unanimous roll call vote
WHEREAS this action would increase the financial
pressure on all County funds, possibly affecting service
delivery; and
WHEREAS Oakland County reported an unreserved fund
balance of $109.8 million for the fiscal year ending
September 30, 2003; and
WHEREAS of that unreserved fund balance,
$50,890,224.17 reflects a designation of property taxes
collected during FY 2003 for use in the first quarter of FY
2004, as required by GASB statement 33 Accounting and
Financial Reporting of Nonexchange Transactions; and
WHEREAS this implementation of GASB 33 artificially
increases the County's General Fund balance; and
WHEREAS the removal of the $50.9 million designation
from the General Fund would provide a more realistic view
of the County's financial position, yet leave sufficient
General Fund balance to maintain the AAA bond rating; and
WHEREAS the County's previously contracted independent
auditing firm confirmed that the $50.9 million designated
General Fund balance could be used to fund a long-term
obligation, such as retirees' health care; and
WHEREAS in addition to those reasons discussed above,
transferring the $50.9 million from unreserved General Fund
balance to the Retirees' Health Care Trust Fund, the County
will receive a number of benefits including:
- becoming compliant with the required standards;
- reducing the amount of unfunded actuarial
liability so that no major increase in fringe
benefit rates would be required in order to be in
compliance with the new standards;
- generating approximately $225 million in
additional investment income, above the General
Fund experience, over the 40 year period, due to
the ability to obtain a higher rate of return
from longer term investments (7.5% annually per
the actuarial assumptions), and this increased
investment income could be used to accelerate the
funding of the actuarial accrued liability;
- the FY 2005 and FY 2006 County Executive
Recommended budget assumes the transfer of these
funds, allowing the County additional budget
flexibility in order to meet the continued fiscal
uncertainty from the state.
NOW THEREFORE BE IT RESOLVED that the Oakland County
Board of Commissioners approves the transfer of
$50,890,224.17 from the unreserved General Fund balance to
the Retirees' Health Care Trust Fund and the budget be
amended as follows:
General Fund Revenue
90-150000-14000-1582 Prior Years Balance $50,890,224
Expenditures
90-310000-98732-8001 Transfer to VEBA 50,890,224
-0-
Chairperson, on behalf of the Finance Committee, I
move the adoption of the foregoing resolution.
F:NANCE COMMITTEE
Resolution #04170 July 22, 2004
The Chairperson referred the resolution to the Personnel Committee. There were no objections.
Resolution #04170 August 5, 2004
Moved by Scott supported by Suarez the resolutions on the Consent Agenda, be adopted (with
accompanying reports being accepted).
AYES: Coulter, Crawford, Douglas, Hatchett, Jamian, Knollenberg, Law, Long, McMillin,
Middleton, Moffitt, Moss, Palmer, Patterson, Potter, Rogers, Scott, Suarez, Webster, Wilson,
Bullard. (21)
NAYS: None. (0)
A sufficient majority having voted therefore, the resolutions on the Consent Agenda, were adopted (with
accompanying reports being accepted).
MIN MOE TIE FORM 1160111.1
STATE OF MICHIGAN)
COUNTY OF OAKLAND)
I, G. William Caddell, Clerk of the County of Oakland, do hereby certify that the foregoing resolution is a true
and accurate copy of a resolution adopted by the Oakland County Board of Commissioners on August 5, 2004
with the original record thereof now remaining in my office.
In Testimony Whereof, I have hereunto set my hand and affixed the seal of the C"unty of Oakland at
Pontiac, Michigan this 6th day of August, 2004. /
;
G. William Caddell, County Clerk