Retiree Healthcare Plan June 30, 2024 GASBS 75 Actuarial Report
 

Staff recommends that the City Council accept and file the OPEB Valuation Report for Fiscal Year ending June 30, 2024, and approve contribution to OPEB Trust.   

The City of Hawthorne provides medical insurance for retired employees subject to certain limitations. This type of employee benefit is referred to as Other Post-Employment Benefits (OPEB), other than pensions, that employers provide to their retired employees. The City of Hawthorne is required to measure and disclose an amount for annual OPEB costs. Annual OPEB cost is determined by an actuarial valuation required every two years. Actuarial valuations involve estimates and assumptions about the probability of occurrence of events far into the future.

The City engaged Foster & Foster Actuaries to prepare an actuarial valuation of their post-retirement benefits program as of June 30, 2023. In accordance with GASB, this valuation was used to provide the attached June 30, 2024 GASBS 75 disclosure report. This report was prepared using employee census data, enrollment data, premiums, participant contributions and plan provision information provided by personnel of the City Hawthorne. Foster & Foster did not audit this data, although it was reviewed for reasonability. The results of the valuation are dependent on the accuracy of the data. The purpose of the report is to provide the current funded position of the City’s post-retirement benefits program and related accounting information to be reported in the City’s June 30, 2024, financial statement.
 
Key results:

• Increase in the discount rate from 3.54% to 4.27% reflects the additional investment earning expected now that the City is partially pre-funding the benefit in a trust
• All assumptions are based on a partially pre-funded status at the measurement period being July 2022 through June 2023 
• The City began pre-funding in the PARS Balanced Strategy with a $3.5 million contribution in November 2022. An additional $1 million contribution was made in April 2024.  

Recommendation:
In order to pay down the unfunded actuarial liability over a 17 year period, the City should contribute $4.85 million to the OPEB trust in fiscal year 2024-25. With Council approval, this contribution will be made in January 2025.

Create financial stability by reducing long-term liabilities and improving the City’s net position.

None.

72 hours posted notice pursuant to the Ralph M. Brown Act