FINANCE AND ADMINISTRATION COMMITTEE
ITEM:		ACTION ITEM
7.	RECEIVE GOVERNMENT ACCOUNTING STANDARDS BOARD (GASB) STATEMENT NO. 75 - FINANCIAL REPORTING FOR POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS
Meeting Date:			October 13, 2025	Budgeted:	N/A
From:			David J. Stoldt,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Nishil Bali	Cost Estimate:	N/A
General Counsel Review: N/A
Committee Recommendation: The Finance and Administration Committee reviewed this item on October 13, 2025, and recommended _________.
CEQA Compliance: This action does not constitute a project as defined by the California Environmental Quality Act Guidelines Section 15378.

SUMMARY: In June 2015, the Governmental Accounting Standards Board (GASB) issued Statement No. 75 to improve accounting and financial reporting by state and local governments for post-employment benefits other than pensions (OPEB). GASB 75 establishes standards for recognizing and measuring liabilities and expenses. For defined benefit OPEB, this Statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Since this statement requires a full actuarial report, the District used GovInvest/TrueComp to prepare this report for the fiscal year ending June 30, 2025, attached as Exhibit 7-A.

As reported in the Executive Summary, page 3, the District’s Net OPEB Liability as of the valuation date of June 30, 2024, is estimated at $4,833,572. In comparison, District’s Net OPEB Liability as of the valuation date of June 30, 2024, was estimated at $5,222,313. The decrease in liability is attributed mostly to an increase in discount rate (tied to a 20-year municipal AA bond) that reduces the present value of OPEB liability, which is offset by increases in service costs and interest costs.

The District’s annual OPEB expense of $249,789 would fully fund the current and future costs amortized over time. In FY 2024-2025, the District paid premium contributions towards medical coverage for eighteen retirees in the amount of $162,296. This actual cost would be deducted from any contribution made for the year. For example, if the District had fully funded its contribution in FY2024-2025, the $162,296 would have been deducted from the $249,789, resulting in an additional net contribution of $87,493. It should be noted that both current and future costs must be recalculated on an annual basis based on the current employee data and District benefit levels, so the contribution amounts may vary somewhat each subsequent year. The District can elect to either partially fund, fully fund, or continue to fund the costs on a pay-as-you-go basis. The District’s budget in the past has included funds for pay-as-you-go basis. The District’s OPEB reserve balance as of 06/30/2025 was $700,000. Details of existing eligible employees in the OPEB tiered plan are as follows.

Tier 1 Plan (hired by District before 01/01/2013 with 15 years of service) 8 employees

Tier 2 Plan (hired by District after 01/01/2013 with 5 years of service) 17 employees

RECOMMENDATION: Staff recommends that the Finance and Administration Committee recommend that the Board receive the GASB 75 OPEB Valuation Report prepared by GovInvest/TrueComp.

BACKGROUND: In July 2004, GASB issued Statement Nos. 43 & 45, establishing financial reporting requirements for post-employment benefits other than pensions. The District provides health insurance as a post-employment benefit and was required to comply with GASB 43 and 45 and included the required information in its audited financial statements beginning in FY 2009-10. In June 2015, GASB issued Statement No. 75, replacing GASB 45, the financial reporting requirement for post-employment benefits other than pensions, which includes information with respect to the total obligation to provide future retiree health and welfare benefits with fiscal year beginning June 15, 2017.

The main thrust of GASB OPEB standard is to require that public-sector employees recognize the cost of other post-employment benefits over the service life of their employees rather than on a pay-as-you-go basis. While the liability amount must be included in each entity's annual audited financial statements, the GASB statements do not require that the amount be funded. Government entities can either partially fund, fully fund, or continue to fund the costs on a pay-as-you-go basis. Beginning with the fiscal year 2018-2019 budget, District has started setting aside funds towards unfunded pension and other postemployment benefits. With each budget cycle, staff will continue to recommend adding additional funds to these reserve accounts or a tax-exempt Section 115 trust fund, when approved.

EXHIBIT

7-A GASB 75 OPEB Valuation Report

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