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BACKGROUND Actuarial consulting services will be needed to implement two new accounting standards. The new accounting rules have been issued by the Governmental Accounting Standards Board (GASB) and are Statement No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, and Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The implementation date for GASB #43 is June 2008, and June 2009 for GASB #45. GASB #43 covers the financial reporting for assets accumulated in a trust for the purpose of paying the retiree health benefits. GASB #45 covers the financial reporting for the employer liability and annual required contribution to the trust. GASB #43 &GASB #45 apply to all public employers that offer post employment benefits including states, cities, counties, state universities and public hospitals. The basic premise of the new accounting rules is to measure and report the long-term costs of non-pension retiree benefits, with the idea that these benefits are a form of employee compensation that should be recognized as an expense as the employee earns the benefit, which is the way pension benefits are handled. GASB #45 does not require that the actuarial liability be funded. However, it does require that the total liability be disclosed and reported in the annual financial statements. It also requires that an annual amount be funded that will retire the liability over time, or that a liability be reported for any unpaid portion of the annual required contribution. DISCUSSION Bartel and Associates have provided actuarial consulting services to the City of Pleasanton for over 10 years. Initially, their services were in the form of a review of the annual CaIPERS actuarial valuations for pension rates. However, over the last decade as Pleasanton has begun to accumulate reserves to pre-fund retiree health benefits their consulting services were to estimate and update the long term actuarial liability for the retiree medical benefit. More recently this has included updated estimates for plan design changes negotiated through the collective bargaining process with various bargaining groups. Much of this effort was in preparation for the GASB 45 implementation date of June 30, 2009. The actuarial valuation covered in this scope of work will be the valuation used for the Annual Required Contribution (ARC) to an irrevocable trust in both FY 2009-10 and FY 2010-11. Submitted by: ~~~ David P. Culver Director of Finance Approved Ne so ialho City Manager Attachments: 1. Amendment 4 2. Original Agreement Page 2 of 2