AN ORDINANCE
NO. __________
An Ordinance authorizing the creation of a Retiree Health Plan trust fund as a
component of the Columbus, Georgia Employees? Pension Plan pursuant to O.C.G.A.
Section 47-20-10(h); and for other purposes.
___________________
THE COUNCIL OF COLUMBUS, GEORGIA, HEREBY ORDAINS:
SECTION 1.
That creation of a new trust fund titled the Retiree Health Plan Trust is
authorized as a component of the existing Columbus, Georgia Employees? Pension
Plan, for the purpose of pre-funding, in whole or in part, anticipated future
costs of providing other post-employment benefits as defined by Governmental
Accounting Standards Board Statements Number 43 and Number 45.
SECTION 2
Pursuant to O.C.G.A. Section 47-20-10(h), said contributed trust funds shall be
administered as part of the pension plan investment pool under the direction of
the pension plan Board of Trustees.
SECTION 3.
All ordinances and parts of ordinances in conflict herewith are hereby repealed.
__________________
Introduced at a regular meeting of the Council of Columbus, Georgia, held on
the 26th day of February, 2008; introduced a second time at a regular meeting
of said Council held on the _________day of __________, 2008, and adopted at
said meeting by the affirmative vote of ______ members of said council.
Councilor Allen Voting ______________________________.
Councilor Anthony Voting ______________________________.
Councilor Baker Voting ______________________________.
Councilor Barnes Voting ______________________________.
Councilor Davis Voting ______________________________.
Councilor Henderson Voting ______________________________.
Councilor Hunter Voting ______________________________.
Councilor McDaniel Voting ______________________________.
Councilor Pugh Voting ______________________________.
Councilor Woodson Voting ______________________________.
_____________________________ ____________________________
TINY B. WASHINGTON JIM WETHERINGTON
CLERK OF COUNCIL MAYOR
Agenda Item #
Columbus Consolidated Government
Council Meeting
February 26, 2008
Agenda Report #
TO: Mayor and Council
SUBJECT: Retiree Health Trust Fund
INITIATED: Human Resources and Finance Departments
______________________________________
Recommendation: Approve an ordinance authorizing the creation of a Retiree
Health Plan trust fund as a component of the Columbus, Georgia Employees?
Pension Plan.
Background: The City currently pays retiree health care costs on a
pay-as-you-go basis. New governmental accounting rules (GASB 43 & 45) require
recognition of future retiree health care cost liabilities and a means of
addressing those liabilities, such as pre-funding. To preserve our favorable
bond ratings the CCG wishes to establish a plan for pre-funding of our
anticipated retiree health liabilities. As part of this plan, the CCG
partially addressed its liabilities with the new Medicare Advantage plan for
Medicare eligible retirees, resulting in a reduction in Annual Required
Contributions (ARC) for pre-funding from $22.5M to $6.9M, with additional
savings anticipated. The City is currently maintaining funds set aside for
retiree health liabilities in a General Fund account. Actuarial calculations
indicate that we may further reduce our ARC to $4.6M by moving the retiree
health trust funds into the pension plan trust.
Analysis: Retiree health trust funds held in a General Fund account are limited
in growth by short-term investment interest rates. By moving the retiree
health trust funds to the pension trust fund a higher growth or discount rate
can be recognized that will in turn reduce the amount of the ARC.
Legal: As authorized by ?3-104(2) & (3) of the Charter, the Council may change
the composition of the pension trust fund and assign additional functions to
the pension plan Board of Trustees. The Official Code of Georgia in ?47-20-10
(h) grants authority to maintain retiree health plan trust funds ?as part of
the same investment pool as the fund receiving employer and employee
contributions to pay the cost of providing retirement benefits?so long as such
funds are separately accounted for and separate records are maintained with
respect to each fund.?
Financial Considerations: As noted in the background section, the initial
financial impact is estimated to be a $2.3M savings in the Annual Required
Contribution for pre-funding of the retiree health plan. A small additional
cost for actuarial services to maintain separate accounting records in the
pension fund is anticipated; however, cost savings should be realized from
consolidation of actuarial contracts that currently account for the funds
separately.
Recommendation/Actions: Human Resources and Finance Departments recommend
adoption of the proposed ordinance.
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