Item 4D: Resolution Acknowledging Receipt of CAFR

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CITY OF EUGENE, OREGON Notes to Basic Financial Statements (5) Other Information, continued (C) Retirement Plan, continued Annual Pension Cost, continued Based on the PERS December 31, 2005 actuarial valuation, the City has an expected UAL of ($8,784,819). The December 31, 2005 valuation does not take into account investment performance since that date. (D) Other Post-employment Benefits (OPEB) Plan Description The City administers a single-employer defined benefit healthcare plan per the requirements of collective bargaining agreements. The healthcare plan provides post-retirement medical, dental, and vision coverage for eligible retirees, their spouses, domestic partners, and dependents on a self-pay basis. Benefit provisions are established through negotiations between the City and representatives of collective bargaining units. Eligible participants may select from one of the City’s two self-insured healthcare plans: the City Health Plan or the City Managed Care Plan. The level of benefits provided by the plans are the same as those afforded to active employees. Coverage is provided to retirees, spouses, and domestic partners until they become eligible for Medicare, typically age 65, and eligible dependents until age 18. The City’s post-retirement healthcare plan was established in accordance with Oregon Revised Statutes (ORS) 243.303. ORS stipulate that for the purpose of establishing healthcare premiums, the rate must be based on all plan members, including both active employees and retirees. The difference between retiree claims costs, which because of the effect of age is generally higher in comparison to all plan members, and the amount of retiree healthcare premiums represents the City’s implicit employer contribution. The City also provides post-employment life insurance benefits to fully disabled employees through a single employer defined benefit plan. The plan provides a waiver of life insurance premiums for employees who participate in the City’s life insurance plan who become totally disabled; the plan is underwritten by Standard Insurance Company, whereby the City pays a premium rate for active and disabled employees, and Standard Insurance Company provides term life insurance coverage. In the event the City changes life insurance carriers, Standard Insurance Company does not retain any liability for future death benefits. In changing life insurance carriers, if the new carrier was unwilling to accept the liability for the disabled employees, the City would be responsible for any future death benefits. The City’s post-employment life insurance benefit for disabled employees is an elective benefit offered by the City, this benefit is subject to collective bargaining agreements. The amount of life insurance benefits that a disabled employee receives is based on the amount of coverage and the reduction pattern in effect at the time of disablement. The coverage amount varies per employer group; the maximum benefit is $250,000. The City did not establish an irrevocable trust (or equivalent arrangement) to account for either plan. Instead, the activities of the plans are reported in the City’s Risk and Benefits Internal Service Fund. Neither plan issues a separate report. The City has adopted early implementation (effective June 30, 2007) of GASB Statement No. 45 (GASB 45), Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions. At the June 30, 2007 implementation date, an initial net OPEB obligation was established on the estimated cumulative effect if GASB 45 had been in effect for the previous fiscal years. Funding Policy The City has the authority to establish and amend contribution requirements. The required contribution is based on projected pay-as-you-go financing requirements. Since the City’s healthcare plan is self-insured, the annual required contributions can fluctuate. For the fiscal year ending June 30, 2007, the City’s combined plan contributions were $914,520. continued éð