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OPEB Panel Discussion

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OPEB Panel Discussion. Were there complications due to existing union contracts? ... OPEB Panel Discussion. What kinds of challenges arose in the process of ... – PowerPoint PPT presentation

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Title: OPEB Panel Discussion


1
OPEB Panel Discussion
  • FGFOA Career Development Seminar
  • September 15, 2006
  • OPEB from the Government Practitioners Finance
    Side

2
OPEB Panel Discussion
  • Village of Wellington
  • - Francine Ramaglia
  • Town of Davie
  • - Bill Underwood
  • Orange County Comptrollers Office
  • - Paul Wunderlich

3
OPEB Panel Discussion
  • How did the Finance and Human Resource functions
    coordinate their efforts in order to assure that
    all elements of OPEB issues were identified for
    discussion and resolution?

4
OPEB Panel Discussion
  • Were there complications due to existing union
    contracts? What types of issues were encountered
    and how were they resolved?

5
OPEB Panel Discussion
  • What were the reactions of the senior
    administrative staff and elected officials to the
    actuarially determined contributions?

6
OPEB Panel Discussion
  • What management decisions were reached as to the
    approach to take for implementation?
  • Funded versus unfunded
  • Any change in benefits to be offered
  • Any designation of revenue sources

7
OPEB Panel Discussion
  • What kinds of challenges arose in the process of
    implementation?

8
OPEB Panel Discussion
  • Has there been any communication with or feedback
    from current retirees relative to the management
    decisions made for funding OPEB?

9
OPEB Panel Discussion
  • Were there concerns as to the effects of OPEB
    financial management on the bond ratings of the
    jurisdiction?

10
OPEB Panel Discussion
  • Possible effect on bond ratings each ratings
    agency has issued comments on the implementation
    of the OPEB pronouncements

11
OPEB Panel Discussion
  • Moodys Opinion
  • Moodys does not anticipate that the liability
    disclosures will cause immediate rating
    adjustments on a broad scale.
  • Extent to which OPEB Funding Status will be
    incorporated into Rating Process It depends .
  • Still early in discovery phase
  • Political dynamics

12
OPEB Panel Discussion
  • Absolute size of UAL and relative size to key
    financial measures (payroll, budget, tax base)
  • Plan for UAL amortization as well as ongoing
    funding of new OPEB costs as incurred on an
    accrual basis impact of full funding on
    issuers financial flexibility and strength
  • Actuarial assumptions used
  • Nature of the benefits promised ability to modify

13
OPEB Panel Discussion
  • Fitchs Opinion
  • Pre-funding will be a stabilizing factor and
    protective of credit over time
  • Focus on the issuers plans (and reasons
    therefor) for addressing the liability and
    absence of action taken to fund OPEB liabilities
    or otherwise manage them will be viewed as a
    negative rating factor

14
OPEB Panel Discussion
  • Will view negatively any actuarial assumptions
    that are overly aggressive
  • Viewed as soft liabilities, like pensions, that
    fluctuate based on assumptions and actual
    experience

15
OPEB Panel Discussion
  • Standard Poors
    Opinion
  • Unfunded actuarial retiree healthcare obligations
    are viewed as debt-like in nature, similar to
    pensions
  • The key to maintaining a stable credit profile
    for employers will be how they manage these
    liabilities
  • OPEB obligations affect not only debt and
    management factors, but also financial
  • Conservative approach
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