CAFR - sdcera

F I N A N C I A L / N O T E S T O T H E B A S I C F I N A N C I A L S T A T E M E N T S
ADOPTION OF A PENSION SUPPLEMENT FOR TIER A MEMBERS
On May 3, 2007 the Board of Retirement established a pension supplement for Tier A members
that would provide between a $200 and $400 taxable supplemental pension benefit. The Board
of Retirement will review the ancillary benefits allowance policy(ies) on an annual basis. The
Board also approved maintenance of five-year funding of the Tier A pension supplement.
EXCESS EARNINGS POLICY CHANGE
On May 3, 2007 the Board of Retirement adopted a change in the excess earnings policy to
introduce the funded ratio as the determining factor in allowing the Board of Retirement discretion
as to the use of excess earnings. If the funded ratio is below 90% the Board of Retirement is
required to use excess earnings to fund the pension liability. If the funded ratio is between 90%
and 100%, 25% of excess earnings are available at the discretion of the Board of Retirement.
If the funded ratio is between 100% and 115%, 50% of excess earnings are available at the
discretion of the Board of Retirement. If the funded ratio exceeds 115%, the Board of
Retirement has full discretion as to the use of excess earnings.
11. OTHER POST EMPLOYMENT BENEFITS (OPEB)
DESCRIPTION OF PLAN
SDCERA administers an Other Post Employment Benefits program on behalf of the County of
San Diego, including its participating agencies.
A health allowance is paid to retirees, under 65 years of age, with at least ten years of credited
service in SDCERA, and the amount varies according to total service credit. Those who are 65 or
older, with at least ten years of credited service in SDCERA, receive a health allowance, and those
who are eligible for Medicare, receive reimbursement for Part B of Medicare.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
As mentioned in Note 1, when related to the accounting of the OPEB plan, SDCERA presents
information according to the principles and reporting guidelines as set forth by the Governmental
Accounting Standards Board.
CONTRIBUTIONS
San Diego County’s Board of Supervisors and the SDCERA Board of Retirement adopted a funding
mechanism under section 401(h) of the Internal Revenue Service Code, which calls for a portion
of the County’s contributions to be recorded in a separate account each year. To ensure that the
County’s annual contribution for the funding of pension benefits is made whole and complete,
the reserve for County contributions is reimbursed from accumulated investment earnings that
exceed the assumed rate of return of the investment portfolio. The assets in the 401(h) reserve
are commingled with total fund assets for investment purposes.
EMPLOYER DISCLOSURES
Participating employers, upon their implementation of the related GASB Statement 45, are required
to disclose additional information with regard to the funding policy, the employer’s annual OPEB
costs and contributions made, the funded status and the funding progress of the employer’s
individual plan, and actuarial methods and assumptions used.
38 COMPREHENSIVE ANNUAL FINANCIAL REPORT 2007