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14
City of Pleasanton
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CITY CLERK
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2009
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051909
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5/14/2009 2:48:15 PM
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CITY CLERK
CITY CLERK - TYPE
STAFF REPORTS
DOCUMENT DATE
5/19/2009
DESTRUCT DATE
15 Y
DOCUMENT NO
14
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525 <br />S20 <br />515 <br />510 <br />55 <br />50 <br />ChaPay as You Go versus Pre Funded Trust <br />City of Pleasanton <br />G ASIA 45 31 Y ear Projection <br />(Millions) <br />Page 9 of 13 <br />4* Pay As You Go Cost fARC- 30yr Amortization <br />Based on this analysis, staff has focused its attention on pre- funding the OPEB liability <br />as it represents the best current alternative to hold assets to fund the City's post <br />retirement health benefits, consistent with GASB #45. <br />Trust Fund Options <br />Once a decision is made to pre -fund, it is necessary to identify where the money used <br />for pre- funding will be deposited. In general, there are two options as follows: <br />Dedicated Fund- This is a dedicated City fund similar to City and LPFD Retiree <br />Insurance Reserve Funds. Funds deposited in such a fund, which is not irrevocable, <br />will not meet GASB 45 accounting requirements and are generally viewed as "pay <br />as- you -go" funds since the City has full access to the fund's assets for various uses <br />other then pre- funding retiree health benefits. <br />Irrevocable Trust Fund- This is a trust fund where the assets transferred into the <br />fund are restricted solely for the benefit of paying retiree medical benefits. Assets <br />invested in an irrevocable trust can be transferred to another qualifying irrevocable <br />trust at any time. <br />After reviewing the two options above, staff has determined that an irrevocable trust <br />represents the best alternative for holding pre- funding deposits, consistent with GASB <br />#45. <br />There are essentially five different options available to establish an irrevocable trust <br />fund under federal income tax rules for holding assets to fund health benefits for <br />retirees. These include: <br />
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