Agenda Packet 12-10-18 Meeting - REVISED

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CITY OF EUGENE, OREGON Notes to Basic Financial Statements continued (5) Other Information, continued (F) Other Post-Employment Benefits (OPEB) – Retiree Health and Life Insurance Plan (RHLI) Plan Description The City administers the RHLI, a single-employer defined benefit healthcare plan that 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 three self-insured healthcare plans: the City Health Plan, the City Managed Care Plan, or the Hybrid 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 to eligible dependents until age 26. 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. Plan Benefits 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. Due to the effect of age, retiree claim costs are generally higher than claim costs for all members as a whole. The difference between retiree claims costs and the amount of retiree healthcare premiums represents the City’s implicit employer contribution. 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. Contributions 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, 2018, the City’s combined plan contributions were $2,328,883. As of June 30, 2017 there were 1,426 active and 207 inactive members who meet the requirements to receive benefits when they retire. Funding Policy 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. As of June 30, 2018, the City has set aside $4,043,943 to pay for future post-employment benefits, which is included in the unrestricted portion of net position in the Risk and Benefits Internal Service Fund. Since these assets have not been placed in a qualified trust (or equivalent arrangement) they have not been recognized as part of the actuarial valuation. OPEB Assets, Liabilities, OPEB Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to OPEB At June 30, 2018, the City reported a ($17,528,794) net OPEB asset (liability). The net OPEB asset (liability) was measured as of June 30, 2017, and the net OPEB asset (liability) was determined by an actuarial valuation as of July 1, 2016 rolled forward to June 30, 2017. 80 December 10, 2018, Meeting - Item 2D