2007 Emerging Issues Forum
LARRY STONE
Consultant
Stone Consulting
Panel Two: Revisiting GASB 45
Staring Down the Barrel of a GASB 45
STARING DOWN THE
BARREL OF GASB 45
A Local Perspective
Larry Stone
STONE CONSULTING, INC.
31 Marlyn Road
Medfield, MA 02052
(508) 359-9600
Lstone@stoneconsult.com
STONE CONSULTING, INC.
STONE CONSULTING, INC.
5 KEY BULLETS
DATA
1
5 KEY BULLETS
PLAN DESIGN
STONE CONSULTING, INC.
STONE CONSULTING, INC.
5 KEY BULLETS
SECTION 18
2
STONE CONSULTING, INC.
5 KEY BULLETS
FUNDING
5 KEY BULLETS
COMMUNICATIONS
informÖeducateÖ act
STONE CONSULTING, INC.
3
BULLET #1: DATA
Multiple Sources
Municipality/Public Entity
School Department
Retired Teachers
Vendors
Start Early!
Data Quality
Missing/Incomplete Data, e.g., claims
STONE CONSULTING, INC.
BULLET #2: PLAN DESIGN
“Over the past two decades ... employers offering
retiree health benefits declined …from 66% in
1988 to 35% in 2006….
…one out of five large, private sector employers
who do offer retiree health care require new
retirees to pay the full cost.”
The Retiree Health Care Challenge, prepared by Hewitt Associates for the
TIAA-CREF Institute, November 2006
FAS 106 effective 1993
STONE CONSULTING, INC.
4
BULLET #2: PLAN DESIGN
Shift Costs
co-insurance
co-pays
individual vs. family
Restrict Benefit Eligibility
vested terminated
STONE CONSULTING, INC.
BULLET #2: PLAN DESIGN
Retirees are not under collective
bargaining
Take teachers out of GIC
Restrict plan options
Rebalance cash compensation and
benefits: total rewards perspective
STONE CONSULTING, INC.
5
BULLET #3: SECTION 18
of MGL Chapter 32B
Requires members to enter
Medicare (if eligible)
EXAMPLE:
65 year old retiree
Medicare: $55k to $79k
Non-Medicare: $198k to $235k
About 28% of cost
STONE CONSULTING, INC.
BULLET #4: FUNDING
Home Rule Petition
Separate Trust Fund Agreement
Funding Sources
e.g., enterprise funds, Medicare Part D
Integrate with Pension Funding
Allocation of Costs
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