Comprehensive Annual Financial Report - Harford County Public ...

HARFORD COUNTY PUBLIC SCHOOLS
NOTES TO FINANCIAL STATEMENTS
June 30, 2012
NOTE 6 - POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS (continued)
Annual OPEB Cost and Net OPEB Obligation
The Board's annual other postemployment benefit (OPEB) cost (expense) is calculated based on
the annual required contribution of the employer (ARC), an amount actuarially determined in
accordance with the parameters of GASB Statement 45. The ARC represents a level of funding
that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any
unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The
following table shows the components of the Board's annual OPEB cost for the year ended June
30, 2012, the amount actually contributed to the plan, and changes in the Board's net OPEB
obligation:
Annual required contribution $ 41,644,000
Interest on net OPEB obligation 6,322,000
Amortization of net OPEB obligation (5,939,000)
Annual OPEB cost (expense) 42,027,000
Contributions made 24,556,886
Increase in net OPEB obligation 17,470,114
Net OPEB obligation - beginning of year 109,940,815
Net OPEB obligation - end of year $ 127,410,929
The Board's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and
the net OPEB obligation for the year ended June 30, 2012 was as follows:
Fiscal Year Annual Percentage of Annual OPEB Net OPEB
Ended OPEB Cost Cost Contributed Obligation
6/30/12 $42,027,000 58.4% $127,410,929
Funded Status and Funding Progress
As of July 1, 2011, the plan was 3.30 percent funded. The actuarial accrued liability for benefits
was $462,698,000, and the actuarial value of assets was $15,255,626, resulting in an unfunded
actuarial accrued liability (UAAL) of $447,442,374. The covered payroll (annual payroll of
active employees covered by the plan) was $276,823,307, and the ratio of the UAAL to the
covered payroll was 161.63 percent.
NOTE 6 - POSTEMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS (continued)
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Amounts
determined regarding the funded status of the plan and the annual required contributions of the
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