$200 million is pretty decent savings no matter how ya slice it.
Glendale’s current unfunded Other Post-Employment Benefits (OPEB) liabilities total $250 million, so the partnerships projection of reducing that some $200 million is quite significant.
In a press release on Tuesday, Keenan announced the partnership with Glendale bringing them on to revamp the city’s retiree healthcare benefits system. Keenan is the largest independent broker in the state.
Part of what prompted the partnership is the changing landscape of retirement with the Governmental Accounting Standards Board enacting the new GASB 74 & 75 provisions. The two provisions require governments to recognize and report all unfunded OPEB liabilities as an expense on their financial statements. Previous accounting standards allowed for a 30-year amortization and were only included as part of the financial statement notes. These changes may have an impact on an agency’s credit rating.
Glendale Mayor Ara Najarian took a proactive stance toward the change, saying, “Choosing to tackle this large, unfunded liability was not easy, but it is our responsibility to the taxpayers to be fiscally responsible.”
City Manager Scott Ochoa described an inclusive process of hammering out the partnership, “Through a series of meetings with our employees, we received very constructive input, ideas and challenges in approaching this complex and sensitive issue from a number of different perspectives.”
Steve Gedestad, Municipality Practice Leader for Keenan, spoke about the new challenges presented agencies and their finances, “Agencies are now challenged to manage their current OPEB obligations and as new GASB provisions will require greater transparency of these liabilities. It is critical that these entities address these requirements now with innovative tools and resources to deal with these significant liabilities…”
Glendale’s $200 million reduction is a great step, but the unfunded elephant in California’s living room totals nearly $200 billion, with a B.