OPEB (Other Post Employment Benefit) Funding Options

OPEB liabilities can include any of the following:

1. Retiree health care and health insurance coverage
2. Retiree dental, vision and life insurance
3. Termination benefits based on years of service (not sick leave)
4. All other benefits not funded through pension plans

New accounting standards are changing the way these limited benefits are being reported.  The timetable for OPEB reporting is based on GASB 45 requirements and is determined and phased-in by budget size:

The impact of the OPEB reporting requirements could mean:

1. Local governments may see
   1.  further budget pressure on the operations portion of their budget
   2. debt capacity absorbed
   3. ratings reduced or withdrawn
   4. access to capital markets restricted or denied
2. State and Federal securities laws require full disclosure of obligations that are material to investor decisions
3. Rating agencies (S&P, Moody's, Fitch) have all issued public statements related to the assessment and disclosure of unfunded liabilities and their impact on municipal bond ratings

After the actuarial study has been completed assessing future risk and obligations, Northland can assist with:

1. Identifying options for resolving the problem, such as
   1. Debt
   2. Additional contributions
   3. Reduction in benefits
   4. Liquidation of public assets
2. Setting up a communications plan involving administration, staff, members of governing board
3. Communicating with rating agencies and investment community the process of assessment and plan of action
4. Proceeding with financing the action plan, if appropriate