Vice Chancellor addresses possible $15 million liabilities increase; says no need for worry
After conducting a biyearly liabilities study for the South Orange County Community College District (SOCCCD), an actuary with Total Compensation Systems Inc. (TCS) projected an over $15 million increase in the district’s retiree health benefit fund. The district originally projected just over $69 million in liabilities, but with the possible increase of $15 million, the estimate is now at around $84 million.
Though an increase of that size may concern some, Vice Chancellor of Business Services Debra L. Fitzsimons says there is no need to worry and for a number of reasons.
“We have more than enough money in reserves to cover it,” Fitzsimons said.
Not only will reserves cover the increase if necessary, but the Vice Chancellor also stressed the fact that this was an actuary study, which means the numbers were formulated from assumptions made from viewing previous liabilities data and don’t represent the actual increase for this year.
52 retirees and increases in medical care costs are the driving force behind this $15 million increase in projected liabilities. Fitzsimons stated that with such a sudden rise in retirees as opposed to the usual 6 or 7 each year, such an inflated liabilities fund result made sense. Despite all of this, the Vice Chancellor explained that paying the total amount of liabilities in the fund is entirely optional.
“That goes against the district’s beliefs however and we have every intention to pay the amount in full,” she said.
When presenting this information to the Board of Trustees during their last meeting Sept. 24, Fitzsimons had already formulated 5 separate options to choose from to decide what should be done about the possible $15 million increase. She recommended however for about $9 million of the $15 million to be paid immediately and for the rest to be paid at a later date before the end of the fiscal year.
Before making a final decision, the Board of Trustees elected for the actuary’s study to be validated and to compare TCS’s results with the district’s originally planned liabilities budget to ensure the new liability’s numbers were not mistakenly inflated.
The results of the validity report will be compiled and shared with the Board of Trustees at their next meeting on Oct. 29, who, Fitzsimons believes, will decide to fully fund the possible $15 million increase.
For more information on previous and upcoming board meetings visit: http://socccd.granicus.com/ViewPublisher.php?view_id=2