Other Postemployment Benefit (OPEB) Plans. GASB standards require that governments report other postemployment benefits offered to employees. A typical example of such benefits is health care provided to retirees. It is estimated that the unrecorded and unfunded liability related to OPEB is huge. To investigate the extent of the problem, examine the notes of the most recent CAFRs for the City and County of Denver (www.denvergov.org/controller) and the City of New York (www.cornptroller.nvc.gov).
a. Examine the Schedule of Funding Progress in the pension plan note (section IV, note G, in Denver’s 2007 CAFR) for the City and County of Denver. For the most recent year, how large is the actuarial accrued liability (AAL) for Denver’s health benefits plan (titled DERP Health Benefits in the schedule) and what has been the trend in the funded ratio? Discuss how the funded ratio for the Denver Employees Retirement Plan (DERP) compares to that of the health benefits plan.
b. Examine the Schedule of Funding Progress for the health benefits plan (New York City Health Benefits Plan) for the City of New York. The schedule can be found in the Other Information note (part 3 of note E in New York City’s 2007 CAFR). For the most recent year, how large is the AAL for the New York City Health Benefits Plan and what does the funded ratio indicate about the status of the plan?
c. Compare the funded status of Denver’s health benefits plan to that of New York City’s health benefits plan.