MONROE - When it comes to retirement benefits for full-time staff members, the Monroe school district is confident its liability will continue to drop two years from now when a longtime retirement benefit is eliminated.
According to an actuarial study by Key Benefit Concepts LLC, the district has a present accrued liability value of $4.8 million for all staff as of July 1, 2012. The actuarial accrued liability is the difference between the present value of benefits prior to July 1, 2012 and the value of benefits employees have already earned and benefits expected to be earned in the future. Key Benefit Concepts is an independent employee benefits consulting firm that completes studies for school districts and businesses that provide retirement and other post-retirement benefits.
Monroe's business manager Ron Olson said if the district wanted to fund the annual cost of staff members retiring, it would cost $366,202 per year over the next 30 years. The liability for retirement benefits was built with the assumption that everyone eligible to retire by June 30, 2016 would do so.
"We are in a better place than most school districts," Olson said. "It's a pretty manageable cost. It's 1.3 percent of our budget. Districts looking at a liability 5 to 10 percent of their budget have greater concerns than we do."
Currently, the district pays $52,000 in retirement benefits to staff members who are at least 57 years old and were in the district for at least 15 years. The retirement benefit has been an option in the district for more than 10 years. As part of the benefit, Olson said, $6,000 gets paid at time of retirement and the remaining $46,000 reimburses health premium costs of retiree - that portion can't be taken as a lump sum.
That retirement benefit will sunset and end after June 30, 2016. The elimination of the district retirement benefit for full-time staff members was negotiated in 2011 as part of a teachers' two-year contract that included a salary freeze for the duration of the deal.
The actuarial study is required by the Government Accounting Standards Board as part of a law to assess post employment benefits, such as pensions, as part of the compensation employees earn each year, but they don't receive until they retire. The district has the study completed every five years and they include it with the year's audit.
"It's a report we are required to do so people who buy our bonds and invest in our school know what the numbers are," Olson said. "I don't get too wrapped up in the numbers. They are an actuarial assumption. The numbers will change with the sunset law starts and more will accelerate the use of retirement."
As of July 1, 2012, there are 173 teachers, administrators and exempt staff who are 50 or older in the district. Not all of them are eligible for retirement benefits. Olson doesn't see the change in the retirement benefits leading to a parade of retirements. As of July 1, 2012, there were 66 former full-time employees receiving retirement benefits.
Olson said some teachers may not be ready or in a position to retire before June 30, 2016. The current liability value for all district staff of $4.8 million is down from the $5.4 million in 2007.
"We know the annual cost for liability will be significantly less because of the sunset of retirement benefits," he said.
According to an actuarial study by Key Benefit Concepts LLC, the district has a present accrued liability value of $4.8 million for all staff as of July 1, 2012. The actuarial accrued liability is the difference between the present value of benefits prior to July 1, 2012 and the value of benefits employees have already earned and benefits expected to be earned in the future. Key Benefit Concepts is an independent employee benefits consulting firm that completes studies for school districts and businesses that provide retirement and other post-retirement benefits.
Monroe's business manager Ron Olson said if the district wanted to fund the annual cost of staff members retiring, it would cost $366,202 per year over the next 30 years. The liability for retirement benefits was built with the assumption that everyone eligible to retire by June 30, 2016 would do so.
"We are in a better place than most school districts," Olson said. "It's a pretty manageable cost. It's 1.3 percent of our budget. Districts looking at a liability 5 to 10 percent of their budget have greater concerns than we do."
Currently, the district pays $52,000 in retirement benefits to staff members who are at least 57 years old and were in the district for at least 15 years. The retirement benefit has been an option in the district for more than 10 years. As part of the benefit, Olson said, $6,000 gets paid at time of retirement and the remaining $46,000 reimburses health premium costs of retiree - that portion can't be taken as a lump sum.
That retirement benefit will sunset and end after June 30, 2016. The elimination of the district retirement benefit for full-time staff members was negotiated in 2011 as part of a teachers' two-year contract that included a salary freeze for the duration of the deal.
The actuarial study is required by the Government Accounting Standards Board as part of a law to assess post employment benefits, such as pensions, as part of the compensation employees earn each year, but they don't receive until they retire. The district has the study completed every five years and they include it with the year's audit.
"It's a report we are required to do so people who buy our bonds and invest in our school know what the numbers are," Olson said. "I don't get too wrapped up in the numbers. They are an actuarial assumption. The numbers will change with the sunset law starts and more will accelerate the use of retirement."
As of July 1, 2012, there are 173 teachers, administrators and exempt staff who are 50 or older in the district. Not all of them are eligible for retirement benefits. Olson doesn't see the change in the retirement benefits leading to a parade of retirements. As of July 1, 2012, there were 66 former full-time employees receiving retirement benefits.
Olson said some teachers may not be ready or in a position to retire before June 30, 2016. The current liability value for all district staff of $4.8 million is down from the $5.4 million in 2007.
"We know the annual cost for liability will be significantly less because of the sunset of retirement benefits," he said.
