Title
Retiree Health Care Plan Actuarial Valuation Report (B)
Explanation
The City of Gainesville receives periodic actuarial valuation reports on its Retiree Health Care Plan (Retiree Plan). The actuarial valuation is the process by which the fiscal status of the Plan is measured on a recurring basis and it, therefore, establishes the required employer (City) contribution rate for the ensuing fiscal years.
Fiscal Note
Based on the results of the September 30, 2003 valuation, the recommended employer (City) contribution rate for the Retiree Plan effective October 1, 2005 is 4.69% of covered payroll. Utilizing projected covered payroll figures, the employer contribution for FY 2006 is estimated to be $4,650,000.
Given existing market conditions, the City has the opportunity to issue taxable debt to discharge the Retiree Plan Unfunded Actuarial Accrued Liability (UAAL). Advance funding the UAAL would reduce the required employer (City) contribution rate to 0.50% of covered payroll. This is projected to produce savings in excess of $600,000 per year over the next ten years.
Recommendation
The City Commission accept the September 30, 2003 actuarial valuation report for the Retiree Health Care Plan and approve the recommended employer (City) contribution rate of 4.69% of covered payroll effective October 1, 2005 should the bonds not be issued or the rate of 0.50% of covered payroll if the bonds are issued.