Other Post-Employment Benefits (OPEB)

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By Council resolution and through agreements with its labor units, the city provides certain healthcare benefits for retired employees under third-party insurance plans. Four employee groups were included: police, fire, SEIU Local 1021, and unrepresented employees.

Effective July 1, 2012, fire employees were transferred by annexation agreements to the Southern Marin Fire Protection District (SMFPD). Except for five specific fire Department employees, all post-employment benefit obligations for the remaining fire employees were transferred to the SMFPD. For the remaining five fire employees, and for the existing fire retirees, they are covered under a Marin County medical plan. The specific five fire employees, now working for the SMFPD who retire after 20 years of service at or after the age 50 are eligible to receive total medical benefits up to the cost of the Kaiser single retiree premium.

Police, SEIU Local 1021, and unrepresented employees are covered under the CalPERS medical program. These three groups, covered under CalPERS who retire at age 50 or over with at least 5 years of service, receive benefits at least equal to the CalPERS minimum set each year. Spouses of retirees can also be covered, but the retiree is required to pay the spousal premiums. However, upon the death of a retiree covered under CalPERS, a surviving spouse continues to receive the CalPERS minimum at no cost.

Effective July 1, 2012, only existing Police, SEIU Local 1021 and unrepresented employees with three or more years of service as of June 30, 2012 who retire after 20 years of service at or after age 50 for police, and at or after age 55 for other employees, were eligible to receive total medical benefits up to the Kaiser single retiree premium (including the CalPERS minimum if applicable). Effective July 1, 2012, employees with less than 3 years of service forfeited the defined postemployment benefits in exchange for an annual defined contribution. Further, effective July 1, 2012, the City offered all employees with more than 3 years of service to exchange the defined benefit post employment benefit for annual defined contribution. Thirty-one out of 72 eligible employees that had 3 or more years of service chose to opt out of the defined benefit post-employment plan in exchange for the defined contribution. As of June 30, 2015, 39 of the remaining Police, SEIU Local 1021 and unrepresented employees are eligible for the 20 year service benefit.

Effective July 1, 2012, all new Police, SEIU Local 1021 and unrepresented employees, covered under the CalPERS medical program, who retire at age 50 or over with at least 5 years of service receive only benefits at least equal to the CalPERS minimum program. The City also pays for dental benefits for certain existing unrepresented retirees after retirement. No future retirees will receive City paid dental benefits.

The annual required contribution (ARC) is determined using the entry age normal actuarial cost method.  The actuarial assumptions include (a) investment rate of return on pay as you go basis of 4.0%, (b) 3.25% aggregate payroll increase, (c) a healthcare trend of declining annual increases ranging from 8% in January 2016 to 5.5% starting January 2021, and (d) 3.0% general inflation rate. The actuarial methods and assumptions used include techniques that smooth the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Actuarial calculations reflect a long-term perspective and actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to revision at least biannually as results are compared to past expectations and new estimates are made about the future. The City’s OPEB unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll using a closed thirty-year amortization period.

The City of Sausalito, has long recognized the importance of funding OPEB annual required contributions (ARC) and unfunded accrued actuarial liabilities (UAAL). Effective March 3, 2015, City Council passed a resolution to participate in the Public Agency Retirement System (PARS) Post-Employment Benefits Trust, an irrevocable trust established to prefund post-retirement health care benefits. As of June 30, 2016, the City had accumulated approximately $397,987 in the separate internal services as partial offsets for the remaining Police, SEIU Local 1021 and unrepresented employees actuarial accrued liabilities.

The periodic actuarial reports can be found in the following links: