COUNTY CLERK/AUDITOR/RECORDER/ELECTIONS - J. P. GONZALEZ

Direct the Auditor to transmit $900,000.00 to the PARS OPEB trust for the FY2018-19. This amount is comprised of the FY 2018-19 excess amount expended for “pay-go” retiree healthcare costs of $400,000.00 along with $500,000.00 budgeted OPEB trust contribution.

SBC FILE NUMBER: 608

Since the creation of the County’s Internal Revenue Code (IRC) 115 Irrevocable Other-(Than Pension) Post-Employment - Benefits (OPEB) trust as recommended by Governmental Accounting Standards Board (GASB) Statement No. 45 and No. 75, the County with a few exceptions has regularly funded the Annual Determined Contributions (ADC). The June 30, 2017 Nyhart GASB Actuarial Valuation projected that the County’s fiscal year 2018-19 actuarially determined contribution was $1,438,409.

In FY2018-19, the County budgeted $500,000 towards meeting the $1.4m actuarially determined contribution to be transmitted to the County’s OPEB trust.  Generally, these transmitted payments are made once a year after the end of each fiscal year no later than July 31^st.  At this time, an additional opportunity to prefund the County’s OPEB obligations was identified and discussed during the April 23, 2019 Special Meeting.  Annually, the County budgets and expends the “pay-go” healthcare costs for retirees. In FY2018-19, the expended amount was in excess of actual costs by approximately $400,000. The County has two options to deal with these excess retiree healthcare funds. The first option is to reverse the amount of the excess retiree healthcare costs. The positive with this option would be that approximately $200,000 will revert to the General Fund balance. The negative is that another $200,000 would be returned in authorized State and Federal funding in the sub-vented funds.  The second option is to include the $400,000 of the excess “pay-go” funds with the $500,000 that was budgeted as a contribution to the OPEB trust. The positive is that this additional prefunding will bring down the balance of the County’s net OPEB liability and bring this defined benefit closer to fully funded status.  This was the recommendation made by the County Auditor-Controller at the April 23, 2019 Special Board of Supervisors meeting with the OPEB presentation and discussion.  

The County of San Benito along with several other California counties, cities, schools and special districts have prefunded OPEB obligations by establishing their Internal Revenue Code (IRC) 115 Irrevocable Trust for OPEB obligations with either the CalPERS California Employers’ Retiree Benefit Trust (CERBT) or with the Public Agency Retirement Services (PARS) private firm or with both. The County of San Benito has established two OPEB IRC 115 trusts and would like to begin utilizing the PARS OPEB trust for prefunding purposes.