Brothers/Sisters,

Here is an article I wrote for our Local regarding GASB 45. Do some research and find out how to combat your City when they tell you "The Sky is falling". It is an explaination of how it impacts our City and what steps they are considering in solving the shortfall.

As always, if you have questions, feel free to give me a call. (208) 283-2672.

Fraternally,

Tom Lovell

Brothers/Sister of Local #149,

During the past two months, the City formed committe has been meeting with regards to GASB 45 (Governmental Accounting Standards Board). I have attended these meetings to put forth suggestions from the IAFF and other Departments have suggested so that we do not see the drastic effects that it has had on other Locals around the Country. Some of the effects have been layoffs, Station Closures and removal of any Post Employment Benefits.

Here is a brief description of GASB 45 and what it's impact is on the City of Boise and what we have learned from the Task Force discussions the last two months.

GASB 45, will become effective at the close of the City of Boise’s fiscal year 2008.  Driven by events in the private sector, it seeks to ensure that post-employment benefits termed OPEB or “other post-employment benefits” are funded if something catastrophic happens to an organization.  It will require that a liability actuarially estimated at $13 million be posted to the City’s financial statements. The City options include funding the liability, or making a plan to reduce or eliminate it.

In late March 2007, Jef Faw (Chief Financial Officer) convened a task group from various departments that were interested in exploring alternatives to the funding option. 

Actions Plan Steps:

1. Proposed actions would not apply to current retirees

2. Mayor and Council determine that the City will not fund for the GASB 45 annual required contribution (ARC) in FY 2008/2009.  

3. Mayor and Council direct staff to restructure the current defined benefit OPEB plans to a defined contribution OPEB plan, using a third-party Voluntary Employee Beneficiary Association (VEBA) program.

4. After selecting an appropriate third party carrier to administer the VEBA, transfer all current, and past employee Post Employment Health Plan (PEHP) accounts with positive cash balances from Nationwide to the new carrier.

5. Determine the types of contributions, and amounts of each type, to be made by the City to the individual VEBA accounts that mutually meet the needs of the City and its employees.

1. Annual contributions based on a percentage of salary as currently done for PEHP accounts
2. Annual sick leave buy back as currently done
3. Lump sum contributions at retirement based valued leave accruals as currently done
4. City contribution amount for elected City-provided health insurance plan while employed with the City
5. Fiscal incentives for choosing cost-saving options such as Economy  PPO or opting out of City-provided health plans
6. Other potential contributions, annual or lump-sum, based on other formulas such as years of service.

Devise and apply a formula that actuarially factors in and calculates, for age-groupings of active City employees the net present value of future costs that otherwise would be associated with each individual’s post-retirement, City-funded dollar credit, retiree health insurance and implied subsidy, as appropriate.  Begin to provide this calculated amount into the individuals’ VEBA account in equal payments over a five year period beginning December 31, 2007.  Employees will be able to use funding from his/her VEBA account to cover monthly premiums for any then existing City-provided health care plans, deductibles and/or co-payments, other health care costs such as a health plan not provided by the City, and life insurance premiums when he/she retires from the City. 

6. Ensure through a comprehensive, intensive educational effort that all staff, active and retired, understand that with this cash resource deposited in the VEBA account, all aspects of PEHB fulfillment from January 1, 2008 forward will be shifted to employee.

These changes could become effective for general and Police command employees effective Jan. 1, 2008.

Keep in mind that these discussion were geared toward General Employees and we made it very clear that any changes to Local #149's benefit package would have to be negotiated in a successor Collective Labor Agreement in March of 2008.

I know that this is a ton of information and it is difficult to follow. I have been in contact with several Attorneys that know the effects of GASB as well as the IAFF to make sure we are staying on top of the situation. I will make more information available as it happens.

Any questions give me a call at 283-2672.

Fraternally

Tom Lovell