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1. Detailed information about an agency's non pension or "other post employment benefits" (or OPEB). That is who benefits, types of benefit, etc. (Pleasanton's OPEB is confined to City paid health benefits for a retiree and his /her spouse), 2. An actuarially determined liability for the OPEB and the amount of financial assets that are currently available to meet the liability, and 3. A statement of the extent that an employer makes contributions to offset its OPEB and any outstanding OPEB liability. Like the FASB 106 and its related rulings, GASB #45, which applies to all public agencies including states, counties, cities, public school districts, state universities, and public hospitals, has had a significant impact on how public sector agencies report, estimate and fund OPEB benefits and, fundamentally, it has forced agencies to rethink their "pay -as- you -go" philosophy. Central to GASB #45 is an identification of an Annual Required Contribution (ARC) which consists generally of two components, the normal cost that will apply as long as there are covered employees and an Unfunded Actuarial Accrued Liability (UAAL) which is essentially the difference between the value of the assets accumulated to finance an agency's OPEB obligation and the actuarially accrued long term liability of the obligation. In general, the ARC represents an employer's required annual contribution for meeting OPEB obligations. As a result, the ARC recognizes OPEB's as earned financial obligations accrued during an employee's entire period of service. This contrasts with the "pay -as- you -go" method that reflects an agency's cost for meeting OPEB's for current retirees. As an example, using the "pay -as you -go" approach, an agency with 100 active employees and 10 retired employees receiving a post- retirement health benefit at a cost of $1,000 annually, would meet its OPEB obligation by only paying $10,000 annually to cover the cost of the retired employees. In accordance with GASB 45, the same agency noted above is required to disclose and preferably fund, the total cost of not only the ten retired employees, but the future costs for all 100 current employees, which results in a significantly greater liability. It should also be noted, that GASB 45 does not require funding an agency's long term OPEB liability, however, its does require the liability to be reported in the financial statements each fiscal year. Further, while GASB promulgates accounting standards for public sector entities, it has no enforcement power. However, failure to follow its standards can lead to a qualified audit opinion and lower bond ratings. Nevertheless, similar to the impact of the FASB rulings, the GASB rulings represent technical and financial challenges for public sector agencies. In preparation for implementing GASB #45, and in response to Council direction to control health costs and mitigate future liabilities, the City has done the following: Retained the services of a qualified actuarial consultant who has performed periodic actuarial valuations in 1998, 2000, 2004, 2006 and 2008 to determine the City's UAAL and ARC. Page 3 of 13