With all the lawsuits and finger pointing going on in this mess, I wonder what is happening to the promised reforms at the Memphis School System. Here is a good example of why people do not have faith in the management of the Memphis City School system.
The Shelby County School system put in reforms to their retiree health care system which reduced their OPEB unfunded liability by over $500 million dollars. They did this by changing the retiree health care premiums for those retirees over 65 who are eligible for medicare. Here is what their CAFR (comprehensive annual financial report) said.
The change in AAL for OPEB from the June 30, 2008 to the June 30, 2009 valuation date was due to actuarial assumption changes related to reduction in claim costs for post-65 retirees. Effective January 1, 2011, post-65 retirees formerly covered under the self-insured plan will be covered under an insured Medicare Supplement plan which is estimated to reduce claim cost by 63% to 72% depending on age.
Here is what the June 30, 2010 CAFR for the Memphis School System said about their OPEB.
As of June 30, 2010, the actuarial accrued liability for benefits was $1,534,912,045, all of which was unfunded. The covered payroll (annual payroll of active employees covered by the plan) was $615,999,912, and the ratio of the unfunded actuarial accrued liability to the covered payroll was 249.17%.
Can we trust a new board to do the right thing concerning this unfunded liability? Will this huge unattended obligation be transferred to this new board?
|Retiree health care total annual premium, single||Retiree health care total annual premium, family|
|New Shelby County Schools premiums||$4,241 post 65 retirees||$8,483 post 65 retirees|
|Current Memphis City Schools premiums||$5,534 all retirees regardless of age||$15,168 all retirees regardless of age|
The Memphis School system promised a similar change but they have not yet published their rates or specific changes. I hope this change, which hopefully could affect their huge OPEB unfunded liability (over $1.5 billion dollars), will not be lost in the shuffle.