CONTACT:
Bill
Reynolds
(518) 474-4015

FOR RELEASE:
Immediately
May 20, 2008

FUNDING MECHANISM COULD HELP STATE &
LOCAL GOVERNMENTS
SAVE BILLIONS IN FUTURE YEARS
Local Government Organizations Praise
DiNapoli Plan

State Comptroller Thomas P. DiNapoli announced
legislation to authorize the creation of trust funds to help the State
and local governments plan for the cost of Other Post Employment Benefits
(OPEB), which is comprised largely of health care coverage for retirees.
 Under DiNapoli’s plan, local governments would have the option to
invest their assets individually or participate in either a state-administered
investment fund or pool assets with other local governments for investment
purposes.

“The State faces $50 billion in OPEB liabilities,
and New York City is looking at $58 billion in similar obligations,” DiNapoli
said.  “Add that to tens of billions more in OPEB liabilities from
local governments around the state, and the numbers are daunting.  
 

“We’re facing difficult times, and the
impulse may be to push this issue aside.  But almost two million working
New Yorkers are counting on these benefits. The responsible thing to do
is to start preparing for the future in order to protect health care benefits
and save tax dollars.  If we started this fund today, State government
alone could save $22 billion over the next 30 years.”  

GASB 45, a recent ruling by the national
Government Accounting Standards Board (GASB), focuses on disclosure of
OPEB related liabilities.   Previously, there was no requirement for
the State and local governments to report or fund these liabilities. GASB
45 does not require funding of OPEB, but DiNapoli said his proposal for
an OPEB investment fund is an essential part of managing these long-term
costs.

Under DiNapoli’s plan, the local governing
board – or a designated chief fiscal officer – would be the trustee of
any locally-established OPEB trust. The State Commissioner of Civil Service
would be the sole trustee of the State’s OPEB trust, authorized to manage
the trust and invest assets in the OPEB investment fund. The State Comptroller
would be the sole custodian of the OPEB investment fund and manage fund
assets.
 
“The Conference of Mayors appreciates Comptroller DiNapoli’s efforts
to highlight the issues surrounding OPEB liabilities and the increasing
costs of retiree health care benefits,” New York Conference of Mayors
Executive Director Peter Baynes said.  “While most local governments
do not currently have the fiscal capacity to set aside funds for this purpose,
it is important that they first be given the ability to create a local
trust or to participate in a statewide trust.  The State and its local
governments must make every effort to work together to address these staggering
fiscal obligations.”  

"The
New York State School Boards Association is once again pleased to work
with Comptroller DiNapoli to improve the fiscal administration of school
districts,” Timothy G. Kremer, Executive Director of the New York State
School Boards Association said.  “Though it has not yet captured
the public imagination, the issue of retirement benefits looms large in
the financial future of our schools.  This legislation would allow
districts the opportunity to meet future obligations in a cost effective
manner."

“We thank Comptroller DiNapoli for taking
the lead to create a working group of the various local government organizations,
including NYS GFOA, to develop mechanisms for the State and local governments
to be proactive in the management of post employment liabilities, such
as retiree health insurance,” Brian L. Roulin, CPA, Director of Finance,
City of Rochester, and President, New York State Government Finance Officers’
Association, Inc., said.  “This legislation is consistent with our
Association’s mission of enabling government finance professionals to
effectively manage public funds and, in this case, to address known future
financial commitments with solutions today.”

Deedrick Bertholf, Executive Director of
the New York State Association of School Business Officials (NYASBO), said,
“We commend Comptroller DiNapoli and his staff for taking the lead on
this very important issue. For over a year, NYSASBO has advocated for State
action to allow school districts the statutory ability to properly manage
their post-employment benefits.”

Click here
for a copy of the Comptroller’s report on OPEB liabilities, or visit:
http://www.osc.state.ny.us//localgov/pubs/research/opeb_policyreport.pdf
 
For additional information concerning GASB
45 and OPEB: GASB
45 FAQs: http://www.osc.state.ny.us/localgov/pubs/opeb45faqs.htm

Other Post-employment Benefits:  A Plain-Language
Summary of GASB Statements No. 43 and No. 45: http://gasb.org/project_pages/opeb_summary.pdf

Government Finance Officers Association:
 RFP Checklist for OPEB Actuarial Valuation: http://www.gfoa.org/committees/corba/

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