8/10/2017 FINANCE COMMITTEE Minutes

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3 Finance Committee Minutes August 10, 2017 Discussion re ardin Town Pension Fund Unfunded Liabili Craig Mayen., Treasurer/Tax Collector began the discussion reviewing Town Insurance obligations for retired employees referenced as Other Post-Employment Benefits(OPEB). The Town of Mashpee receives an actuarial report every two years* with a collaborative bid,the Barnstable County Commissioners have executed a contract with Segal Consulting. This firm completed the actuarial services for the Town in 2014. All member units of the municipal retirement systems of the Cape&Islands have been offered to participate in the utilization of this contract. Actuarial servi c e s planned for 0 1 with egal Consulting will reduce costs to the Town of Mashpee under the regional bid. The contract will also allow the Town to work and to compensate this firm directly with services to be paid for by the Town. The Financial Team reviewed the summary of valuation results in accordance with Govenunent Accounting Standards Boards (GASB) as of June 3 o,2014. The key results and significant assumptions for the 2014 year are shown on a funded basis(money makes money payment invested in stocks and bonds at a 7.5% interest rate - $48 million) and on a pay-as-you-go basis (paying for the retirees currently going to retire 4.50% interest rate- $75 million). This is the health insurance liability assumption if all employees retire from the Town of Mashpee. In 2012,,the Town of Mashpee placed funding aside for FYI 3, and in May of 2017 funding was approved at Town Meeting to appropriate$50,000 to the OPEB Irrevocable Trust Fundi for F1 to assist the Town in meeting its potential post-employment benefits obligation. The balance of this account to date is nearly $1.5 million. On average,the total annual required contribution would be $3.8 to $5.4 respectively. At the end of the fiscal year in 2009 the employer contribution was 14.2%. This figure has grown to 32%in 2016 with the increased mount of retirees. It was noted the use of Medicare as a primary insurance greatly reduces insurance costs. Methods to dimirn*sh the impact of medical insurance costs were considered, but this would rewire collective bargaining and agreements thereof. Discussion followed with respect to liabilities and possible methods of transferring unexpended monies to the OPEB account. Currently,there are no requirements to secure annual funding for the OPEB trust account. However,the Town at this time has an AAA rating with Standard Poor's, and there is a possible risk of compromising the rating. It is unclear as to how other towns may be dealing with this liability.