In 2000, the City Council of the City of Rocklin established a Retirees’ Health Fund, and began, through the budget process, to allocate monies to this fund. This was in an effort to address the Unfunded Liability associated with Other Post-Employment Benefits (OPEB).
In 2003, the City adopted the CalPERS Vesting Schedule for new hires which, at that time, reduced the costs of Retiree Health by limiting the City’s contributions based on years of service.
In 2004, the Governmental Accounting Standards Board (GASB) issued Statement No. 45, which established standards for the measurement, recognition and display of OPEB expenditures and related liabilities in the financial statements of local government employers. While GASB 45 did not require agencies to fully fund OPEB, it did require the agency to show their funding status and a plan to manage liabilities.
In 2008, the City capped medical benefit contributions.
In 2012, with the rise of medical costs, benefit costs provided under the Vesting Schedule exceeded that of the capped medical benefit contributions. The Vesting Schedule prevented placing a cap on retiree medical contributions for employees hired under the Vesting Schedule. This resulted in higher OPEB costs (depending on years of services).
In 2012, the City used approximately $9.6 M of Retirees’ Health Fund monies to purchase CFD #11 bonds as an investment for the Fund.
In 2013, the City established a Key Management practice to move a portion of surplus General Fund funds into the Retirees’ Health Reserve to help offset the costs of OPEB benefits.
In 2014, the City of Rocklin opened an irrevocable trust fund through the CalPERS California Employers’ Retiree Benefit Trust (CERBT). As of June 30, 2020, the City had $29,352,783 in CERBT.
In 2015, the AFSCME bargaining unit along with the Confidential and Management groups agreed to rescind the Vesting Schedule. The City also began phasing in the payment of the Actuarially Determined Contribution (ADC), starting with 30% of the ADC in 2015 and moving to 100% of the ADC in 2020.
In 2015, GASB approved GASB Statement No. 75, effective for the 2018 fiscal year. GASB 75 fundamentally changed the reporting and accounting requirements for OPEB, requiring the inclusion of the Unfunded Liability on the balance sheet.
The ADC includes the current “pay-as-you-go” costs for current retirees, future benefit costs earned in the year, and an amortized portion of the unfunded liability costs (the amount owed for benefits already accrued by employees, that are not currently funded). If less than the full ADC is paid, the result is an increase in the Unfunded Liability.
In 2018/19, the Fire, Police and Public Safety Managers bargaining groups agreed to rescind the Vesting Schedule.
In December of 2019, the City’s remaining investment in CFD #11 was refunded and sold to investors resulting in approximately $5.6 M being transferred to the CERBT trust fund.
As is customary, the City has had an actuarial report for the previous year prepared, for example June 30, 2019. This year due to the $5.6 M in proceeds from the sale of the CFD #11 investment being deposited into CERBT, staff escalated the preparation of the June 30, 2020 report.