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Board accepts final OPEB valuation showing funded ratios improving but long horizon to full funding
Summary
The board approved the final actuarial valuation for the Police & Fire OPEB trusts, which reported improved funded ratios for police (about 44%) and fire (about 42%) and projected full amortization decades away.
Trustees accepted the final actuarial valuation for the Police & Fire OPEB plans, hearing presenters summarize financial results, drivers of change and long‑term projections for benefit payments and funding levels.
Presenters Jackie and Bill (actuarial consultants) told the board the OPEB assets are primarily held in a Section 115 trust split between police and fire, with a small amount in a 401(a) account in the pension trust. The plans are mostly closed: full benefits are available to a shrinking active group and a larger share of the liability is for current benefit recipients.
The valuation showed funded ratios improved over the prior valuation: police from about 39% to roughly 44%, and fire from about 36% to about 42%. Investment gains and favorable demographic and premium experience drove most of the gains this year. The presenters said investment gains were a major driver of the decreased unfunded actuarial liabilities and that changes in assumptions had been the principal source of losses in recent years.
Contributions: member contribution rules are fixed for those eligible for full benefits (8% of pay), so the actuaries calculate the city’s contribution obligation. Because the active eligible population is shrinking, member contributions are projected to decline over time and the city’s share is expected to rise. Presenters said the plans were projected to reach 100% funded in distant projections (the valuation’s projection showed a long amortization that reaches full funding in the 2040s under current assumptions), and that the city’s contribution projections for the next five years were slightly lower than previously projected because of the recent investment gains.
Liquidity and asset allocation: presenters said the OPEB trusts use a more liquid asset allocation and do not include private-market allocations because the plan is closed and liquidity needs are increasing as net cash flow turns from slightly positive to negative in later years.
Trustees voted to accept the valuation. The motion was made and seconded; the board recorded an affirmative vote to adopt the valuation.
Ending: Presenters recommended continued monitoring of funding policy and coordination with pension funding strategy; trustees asked staff and consultants to bring any recommended funding‑policy adjustments to governance in the coming years.
