Board Approves Plan to Fully Fund Retiree Medical Benefits Liability
At its meeting of November 6, 2006, the Board of Trustees of the Foothill-De Anza Community College District approved a plan to fully fund the district's retiree medical benefits liability over the 30-year period recommended by the Government Accounting Standards Board (GASB). Under new accounting rules enacted by GASB, public agencies such as cities, local school districts and community college districts are required to adopt plans to fund future anticipated costs for retiree health benefits.
The board adopted five recommendations for complying with GASB and preparing a funding plan based on the actuarial study completed in August 2006 by Total Compensation Systems, Inc. "This action demonstrates the board's continuing commitment to fiscal responsibility," said board president Betsy Bechtel.
The actuarial study estimated the district's total accrued liability at $153,676,330 as of June 1, 2006. The board approved a $975,905 increased contribution to the annual cost of retiree medical benefits. This increased contribution will be set aside for future retiree benefits. Augmenting that contribution are funds totaling $1.14 million that the board set aside during the past two years in an initial effort to begin funding the liability. All funds will be deposited in the Community College Retiree Trust, a Joint Powers Authority irrevocable trust sponsored by the Community College League of California. With these actions, the district will be in complete compliance with the new GASB regulations.
"Accountability and sustainability are two of the district's master plan goals," said Martha Kanter, the district's chancellor. "The board's action meets these goals and ensures that this longstanding obligation will be fully funded and not left for future leaders of the district to address."
"I am pleased that the board demonstrated its commitment to the employees by taking this action to ensure that their retiree benefits will be fully funded similar to their pension benefits," said Mike Brandy, vice chancellor of business services.
The Foothill-De Anza Community College District (www.fhda.edu) has provided educational programs and services to the residents of Silicon Valley for almost 50 years, preparing students for careers and for transfer to four-year colleges and universities, serving the communities of Cupertino, Los Altos, Los Altos Hills, Mountain View, Palo Alto, Sunnyvale and portions of San Jose, Santa Clara and Saratoga. The district educates more than 44,000 students each quarter.