1. OTHER POST EMPLOYMENT BENEFITS Presented by: Kathy Guralski, CPA Wisconsin Department of Public Instruction School Finance Auditor October 6, 2006

2. Audio Difficulties?  Make sure the volume on Media Site live is turned up (volume button located beneath the speaker’s picture)  Make sure the volume on your computer is turned up (volume icon located on the right hand side of your computer task bar)  Contact your IT department

3. OUTLINE  When will you be required to implement GASB Statements 43 and 45?  How does implementation impact decisions made by the users of your financial statements?  What method should you use to determine the OPEB liability?  Should you set up a trust?  What are DPI requirements when setting up a trust?  What investment opportunities are available to the trust?

4. When will you be required to implement GASB Statements 43 and 45? GASB 43 Financial reporting for post employment benefit plans other than pension plans  Phase 1 - June 30, 2007  Phase 2 - June 30, 2008  Phase 3 - June 30, 2009 GASB 45 Accounting and financial reporting by employers for post employment benefits other than pensions  Phase 1 - June 30, 2008  Phase 2 - June 30, 2009  Phase 3 - June 30, 2010

5. How does implementation impact financial statements and decisions made by users? Fund Financial Statements District-wide Financial Statements OPEB Liability

6. What method should you use to determine the OPEB liability?  Frequency of valuations 200+ members, at least every 2 years <200 members, at least every 3 years  Actuary Study Required for plans with > 100 members  Alternative Method Allowable for plans with < 100 members

7. Should you set up a trust?  Trust Assurance funds will be available Contribution reduces financial statement liability Effect on bond rating Retiree benefits paid from trust  Pay as you go No assurance funds will be available “Pay as you go” reduces financial statement liability Effect on bond rating Retiree benefits paid from operating funds

8. Should you set up a trust?  Trust GASB 43 and 45 reporting in financial statements Segregation of assets Assets invested under WI Stat. 881.01 Reporting at annual meeting  Pay as you go GASB 45 reporting in financial statements No segregation of assets Assets invested under WI Stat. 66.0603

9. Should you set up a trust?  Trust Aid eligibility  General aid not exceeding liability plus normal cost  Categorical aid not exceeding ARC  Federal and State grants not exceeding ARC  Pay as you go Aid eligibility  General aid “pay as you go”  Categorical aid not eligible  Federal and State grants not eligible

10. What are DPI requirements when setting up a trust?  http://www.dpi.wi.gov/sfs/emp_benefit_trust_fund. html http://www.dpi.wi.gov/sfs/emp_benefit_trust_fund. html

11. What are DPI requirements when setting up a trust?  http://www.dpi.wi.gov/sfs/ben_trust.html http://www.dpi.wi.gov/sfs/ben_trust.html

12. What are DPI requirements when setting up a trust?  Mail to DPI: Actuary study or acceptable cost method calculation Employee benefit trust agreement Legal opinion Board approval

13. What investment opportunities are available to the trust?  2005 Wisconsin ACT 99 Enacted into law January 4, 2006  Funds held in trust to provide for post- employment health care benefits may be invested in the same manner as is authorized for investments under s. 881.01, “Uniform prudent investor act”.

14. What investment opportunities are available to the trust?  2005 Wisconsin ACT 99 Applicable to benefits defined under GASB 45 statement only (exception: school district operating under ch. 119) Trustee must comply with prudent investor rule School district may delegate investment authority over funds to investment manager

15. What investment opportunities are available to the trust?  2005 Wisconsin ACT 99 District obligated to develop trust investment policies and monitor investments on a regular basis Overall investment strategy  Identify risk and return objectives  Investment policy in writing highly recommended  Protects district and trustees

16. What investment opportunities are available to the trust?  2005 Wisconsin ACT 99 Additional reporting at annual meeting or public budget hearing  Applies to ALL districts with fund 73  Reporting required: Amount in trust Investment return earned since last annual meeting Total of disbursements made since last annual meeting Name of investment manager if investment authority has been delegated

17. QUESTIONS? Contact: Kathy Guralski – 608-266-3862 kathryn.guralski@dpi.state.wi.us Lori Ames – 608-266-3464 lori.ames@dpi.state.wi.us