FY 2009 Comprehensive Annual Financial Report - Harford County ...

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HARFORD COUNTY PUBLIC SCHOOLS NOTES TO FINANCIAL STATEMENTS June 30, 2009 NOTE 6 - POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS (continued) Life Insurance Benefits - The Board pays 90% of the life insurance premiums for retirees with at least 10 years of service with the amount of insurance coverage reducing from $20,000 upon retirement to $10,000 five years after retirement. The life insurance benefits paid by the Board for the year ended June 30, 2009 was $42,782. As of June 30, 2009, 1,694 of approximately 1,926 eligible participants were receiving benefits. Annual OPEB Cost and Net OPEB Obligation The Board's annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the Board's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the Board's net OPEB obligation: Annual required contribution $ 36,021,000 Interest on net OPEB obligation 340,000 Amortization of net OPEB obligation (337,000) Annual OPEB cost (expense) 36,024,000 Contributions made - Increase in net OPEB obligation 36,024,000 Net OPEB obligation - beginning of year 8,489,815 Net OPEB obligation - end of year $ 44,513,815 The Board's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the year ended June 30, 2009 was as follows: Fiscal Year Annual Percentage of Annual OPEB Net OPEB Ended OPEB Cost Cost Contributed Obligation 6/30/09 $50,794,000 29.1% $44,513,815 Funded Status and Funding Progress As of July 1, 2008, the most recent actuarial valuation date, the plan was 2.1 percent funded. The actuarial accrued liability for benefits was $589,795,000, and the actuarial value of assets was $12,136,368, resulting in an unfunded actuarial accrued liability (UAAL) of $577,658,632. The covered payroll (annual payroll of active employees covered by the plan) was $278,038,509, and the ratio of the UAAL to the covered payroll was 207.76 percent. - 50 -
HARFORD COUNTY PUBLIC SCHOOLS NOTES TO FINANCIAL STATEMENTS June 30, 2009 NOTE 6 - POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS (continued) Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. Significant actuarial assumptions are as follows: Valuation Date July 1, 2008 Actuarial Cost Method Projected unit method Amortization Method Level percentage of projected payroll over a 30-year period Asset Valuation Method Market value Actuarial Assumptions: Discount Rate 4.00% Investment Rate of Return 4.00% per year compounded annually Payroll Growth Rate 3% Healthcare Cost Trend Rates: Pre-65 Medical 8.76% initial / 4.1% ultimate (not applicable to Life) Post-65 Medical 8.76% initial / 4.1% ultimate (not applicable to Life) Dental 5.0% The actuarial value of assets was determined using techniques that spread the effects of shortterm volatility in the market value of investments over a five-year period. The UAAL is being amortized as a level percentage of projected payroll on an open basis. - 51 -
Page 1 and 2:
Comprehensive Annual Financial Repo
Page 3 and 4:
Harford County Public Schools A Com
Page 5 and 6: Harford County Public Schools Table
Page 7 and 8: Introductory Section Aedan McBridge
Page 9 and 10: Board of Education of Harford Count
Page 11 and 12: Harford County Public Schools 102 S
Page 13 and 14: Harford County Public Schools unsca
Page 15 and 16: - 9 -
Page 17 and 18: Financial Section Katie Perzinski,
Page 19 and 20: Report of Independent Public Accoun
Page 21 and 22: Harford County Public Schools Manag
Page 33 and 34: Harford County Public Schools Exhib
Page 41 and 42: Exhibit 9 Harford County Public Sch
Page 43 and 44: HARFORD COUNTY PUBLIC SCHOOLS NOTES
Page 51 and 52: NOTE 2 - CAPITAL ASSETS HARFORD COU
Page 55: NOTE 5 - PENSION PLANS (continued)
Page 59 and 60: NOTE 8 - RISK MANAGEMENT HARFORD CO
Page 61 and 62: Required Supplemental Information A
Page 63 and 64: Other Supplemental Information Mich
Page 65 and 66: Schedule B Harford County Public Sc
Page 67 and 68: Schedule C Harford County Public Sc
Page 69 and 70: Schedule E Harford County Public Sc
Page 71 and 72: Statistical Section This part of HC
Page 73 and 74: Table 2 Harford County Public Schoo
Page 81 and 82: Table 10 Harford County Public Scho
Page 83 and 84: Compliance Section Austin Sapp, Fal
Page 85 and 86: Our consideration of the internal c
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