TO: Honorable City Council
FROM: City Manager
SUBJECT: A Resolution of the City Council of the City of Commerce, California, Approving an Agreement for Consulting Services with Foster and Foster Actuaries and Consultants to Provide a Detailed Governmental Accounting Standards Board (GASB) Statement No. 75 – Accounting and Financial Reporting for Post-Employment Benefits (OPEB) Other than Pensions Actuarial Consulting Services MEETING DATE: October 24, 2023
RECOMMENDATION
1) Approve and adopt the proposed Resolution and assign the number next in order. 2) Amend the FY 2023-24 annual operating budget by appropriating $27,000 from the reserves into Account No. 10-1110-54011 (Finance Administration Other Financial Services).
BACKGROUND
The primary objective of the Financial Reporting Statement to be prepared by Foster and Foster is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for all postemployment benefits (pensions and OPEB) with regard to providing decision-useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency.
The scope of this Statement addresses accounting and financial reporting for OPEB that is provided to the employees of state and local governmental employers. This Statement establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this Statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are addressed.
DISCUSSION
Foster & Foster previously prepared a June 30, 2020 valuation. The June 30, 2022 valuation will provide the Plan’s June 30, 2022 funded status and actuarially determined contributions (ADC) for fiscal years 2022/23 and 2023/24 and the basis for the GASBS 75 accounting information for fiscal years 2022/23 and 2023/24.
GASBS 75 accounting information for each fiscal year will be provided in a separate report. The funding valuation report will include the same information as previously:
Historical valuation results, asset information including returns, demographic information, and contributions vs. ADC Gain and loss analysis with changes in the Actuarial Accrued Liability since the prior valuation Long term contribution and benefit payout projection
Results provided separately for cash and implied subsidy Statistical comparison of City results with other Foster & Foster California OPEB valuations Detailed participant statistics, including summary of healthcare plan and coverage elections Summary of upcoming OPEB and CalPERS issues.
Normally, the valuation results would be ready in approximately 6 to 8 weeks all the requested information is provided to the consultant.
ALTERNATIVES
1. Approve staff recommendation
2. Disapprove staff recommendation
3. Provide further direction to staff
FISCAL IMPACT
The Operating and Capital Improvement Program Budget for fiscal year 2013/24 did not include an appropriation to address the actuarial study as presented above. Staff is requesting that $27,000 be appropriated from the General Fund fund balance into 10-1110-54011 (Finance Administration Other Financial Services account) in order to retain the actuarial consulting services of Foster and Foster Actuaries and Consultants to perform work mentioned above. The fee breakdown is as follows:
Valuation Report
FY 22/23 recommended contributions $10,500
FY 23/24 recommended contributions $10,500
FY 2022/23 GASBS 75 Report $ 3,000
FY 2023/24 GASBS 75 Report $ 3,000
Not to Exceed Total $27,000
RELATIONSHIP TO STRATEGIC GOALS
This report before the Council is not applicable to any specific 2016 Strategic Plan goal; however, it is related to the following: Fiscal Sustainability – The City of Commerce will implement innovative and responsible policies and business practices to effectively manage its fiscal and human resources. The City will maintain a stable financial environment that is transparent and supports an outstanding quality of life for our community. City business practices will be efficient, business friendly and ensure exceptional customer service.
Recommended by: Vilko Domic, Assistant City Manager
Approved as to form: Noel Tapia, City Attorney
Respectfully submitted: Edgar P. Cisneros, City Manager
ATTACHMENTS
Resolution
Agreement
Page PAGE 2
CITY OF COMMERCE
AGENDA REPORT
Item No.