Item 4C: Adoption of Resolution on FY12 CAFR

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CITY OF EUGENE, OREGON Notes to Basic Financial Statements (5) Other Information, continued (D) Other Post-employment Benefits (OPEB), continued City Healthcare Plan, continued Plan Description, continued 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. 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, 2012, the City’s combined plan contributions were $628,719. Annual OPEB Cost and Net OPEB Obligation The City’s annual other post-employment benefit cost (expense) is calculated based on the annual required contribution of the employer, an amount actuarially determined in accordance within the parameters of GASB 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City’s annual OPEB cost for the fiscal year ending June 30, 2012, the amount actually contributed to the plans, and changes in the City’s net OPEB obligation: Annual required contribution $ 995,671 Interest on net OPEB obligation 218,257 Adjustment to the annual required contribution (279,294) Annual OPEB cost (expense) 934,634 Contributions made 628,719 Increase in net OPEB obligation 305,915 Net OPEB obligation, beginning of year 4,197,255 Net OPEB obligation, end of year $ 4,503,170 continued 73