Public Employee Post-Employment Benefits Commission
Nearing Final Report

 

The Governor’s Public Employee Post-Employment Benefits Commission (PEBC) held its last scheduled public hearing this week, dedicating most of the meeting to reviewing the draft recommendations that will be submitted to the Governor and the Legislature.

 

You may recall that the PEBC was appointed by the Governor a year ago and has been charged with these responsibilities:

 

·                    Identify the full amount of post-employment health care and dental benefits for which California governments are liable and which remain unfunded

 

·                    Evaluate and compare various approaches for addressing governments’ unfunded retirement health care and pension obligations

 

·                    Propose a plan to address governments’ unfunded retirement health care and pension obligations.

 

The results of the above are to be included in a full report to be submitted to the Governor and the Legislature by January 1, 2008.

 

The PEBC has held about a dozen public hearings since March 2007. Various public employment and retiree benefit constituents have presented testimony at the hearings, including employees, retirees, bargaining unit representatives, public pension plan representatives, and actuaries.

 

The PEBC also issued a statewide survey to each public agency in California—approximately 3,700—asking whether or not the agency provides other postemployment benefits (OPEB) to retirees. Even if the retirees pay the cost, the agency was instructed to answer “yes.” For each agency that responded that way, the survey requested this additional information:

·                    The number of active and retired employees

·                    The total annual operating budget

·                    The total annual OPEB cost

·                    The agency’s funding approach to its OPEB liability

·                    The Unfunded Actuarial Accrued Liability (UAAL) or anticipated date for publicly releasing this information

·                    The discount rate used in the actuarial valuation of the OPEB liability

Approximately half of all K-12 and community college districts have responded to the survey. Here are the preliminary response rates by type of agency:

 

 

 

PEBC staff reported that, although the response rate is low for the number of special districts in the state, they vary significantly in size, and the largest districts are represented in the survey results.

 

Based upon the testimony, research, and survey results, the PEBC has been crafting its final report to the Governor and the Legislature. Approximately 40 recommendations have been drafted and were reviewed during the hearing this week. The recommendations reflect, overall, that funding the OPEB liability is just as important as funding an agency’s pension liability, and that agencies can take certain steps to protect employees and retirees as well as to help mitigate the OPEB liability. The report will also include an opening message from the PEBC Chair, Gerald Parsky, rationale to back up each of the recommendations, and a summary of the OPEB survey results by agency type.

 

The report will be finalized and is expected to be presented to the Governor and the Legislature in time for the Governor to include some of the information, if so desired, in his State of the State Address, which is currently slated for January 8, 2008.

 

—Sheila G. Vickers