4-13-07 Public Employee Postemployment Benefits Commission Update

Volume 20 For Publication Date: April 13, 2007 No. 8

Public Employee Postemployment Benefits Commission Update

The Governor issued an executive order in January to establish the Public Employee Postemployment Benefits Commission to address the issue of unfunded liabilities faced by California’s public employers for other postemployment benefits (OPEB), mainly health benefits for retirees (see “Governor Establishes New Commission to Address Public Employee
Postemployment Benefits” in the January 5, 2007, Update, page 2).

The Commission consists of 12 members, six of whom are appointed by the Governor and three appointed by the leader of each house. The Commission is to identify the amount of unfunded liabilities for all of California’s public agencies for OPEB, identify various approaches for addressing the unfunded liabilities, compare the advantages and disadvantages for each approach, and propose a plan or plans for addressing the unfunded benefits. This work is to be completed and submitted to the Governor and the Legislature by January 1, 2008.

Anne Sheehan, Chief Deputy Director of the Department of Finance, was introduced as the Executive Director of the Commission at its first meeting on March 9, 2007. A work plan was distributed. Chairman Gerald Parsky stated the general plan of the Commission will be to gain a full understanding of the retiree healthcare problem, explore policy approaches to the problem, and decide on recommendations.

The work plan will be as follows:

· General review of background materials and major publications and recommendations, including interviews of experts

· Hold at least five statewide public hearings around the state

· Develop an economic model of the magnitude of the problem

· Formulate recommendations

A meeting of employer and retirement system representatives was organized on February 27 to discuss how to best assist the Governor's OPEB Commission. At the request of Anne Sheehan during that first meeting, they met a second time on April 4 to craft a survey to elicit consistent OPEB data from all California government agencies. At the meeting were representatives of the Commission staff, the state (Department of Finance, Legislative Analyst’s Office, Public Employees’ Retirement System [PERS], General Services, and California Research Bureau), counties, cities, special districts, and schools (California School Boards Association [CSBA]).

School Survey Needed

The California State Association of Counties (CSAC) has drafted a survey that will request data identifying the responding agency and contact person, numbers of employees and retirees participating in health benefits, annual costs of OPEB benefits, portions of costs devoted to prepayment of liabilities, extent of Unfunded Accrued Actuarial Liability (UAAL) for OPEB (if known) with low, median, and high range, and discounting of OPEB liabilities (if known). State General Services staff will send a draft of the survey to the e-mail list of the meeting group for review over the next week. State General Services staff, Ken Marzion of PERS, and Tim Lynn of the Department of Finance will meet to reconcile the comments and complete a final OPEB survey.

A coalition of school representatives, headed by CSBA, is offering similar assistance regarding the 1,100 school districts. It may take that coalition longer, however, to develop contact lists. Chief Executive Officers and Chief Business Officials in school agencies should be the recipients of this survey. School agency participation is time sensitive in order to initiate responses prior to summer.

The survey will be online and completed responses will automatically be routed back to the Commission. The Commission website is now live at www.pebc.ca.gov.

We will release information of any additional meetings of this coalition and will keep you informed on this issue. Any questions regarding this information can be directed to Steve Keil, CSAC, at (916) 327-7500, ext. 521, or Dr. Jamillah Moore, School Services of California, at (916) 446-7517, ext. 106.

—Jamillah Moore