In late October 2005, members of the City Council attended a Workshop on actuaries. A representative from Buck Consultants who has been working with City Management reviewed the status of the City's unfunded liabilities. There has been a lot of talk about unfunded liabilities as of late because by 2009 all municipalities will be required to follow Governmental Accounting Standards Board (GASB)'s Other Post employment Benefits (OPEB) procedures with regard to how they report pensions. This reporting system has been in place in the corporate world for over twenty years.
The City of Newport is ahead of the curve in many regards when it comes to OPEB in that we contracted with our actuaries to provide an OPEB valuation as of July 1, 2003. Most municipalities across the country are only beginning this process now. In 2003, accrued liabilities on all benefits earned was estimated at $115,444,613. In 2004 that number was reduced to $61,575,391. The reduction was due to the fact that medical trend assumptions have been more standardized by the actuaries.
Representatives from Buck Consultants are currently working with the finance department to determine the valuation for July 1 numbers.
The City has always had unfunded and funded liabilities which it is required to pay. The difference is now it must report these liabilities in worst-case scenario fashion -- in other words if every employee eligible for retirement were to retire and live the maximum number of his/her life span what would the City be responsible for paying. Other communities around the state and country are facing the same challenges -- Providence for example has $480 million in unfunded liabilities and Cranston $100 million.
City Administrators are currently reviewing ways in which to reduce the amount of accrued liabilities in the form of creative payment of health care as well as setting up accounts dedicated to post employment benefits which were passed unanimously by the City Council this year when Resolutions by Mayor Trifero and Councilor Napolitano were introduced.
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© Colleen McGrath 2005