The Half Billion Dollar Elephant in Our Schools’ Closets

F01

Two important numbers to be concerned with are: • the projected total health care benefits costs over the next 30 years which consists of the ARC and the normal costs for the year • ARC, which represents an amortized payment that would remain the same for 30 years, after which time amortization payments would end

No recommendations for this finding

F02

Briggs Elementary School District: (@449 Students – 2 Schools) • the budget for the current school year is $3,661,001 • the annual costs associated with health care benefits for active employees are $228,732 • does not currently have a retiree health care benefits plan • does not pay any portion of the retiree’s dependent health care benefits • there are no participants in the District’s retiree health care benefits plan • the health care benefits plan for current employees is pay-as-you- go • does not have any unfunded health care benefits liability

No recommendations for this finding

F03

Conejo Valley Unified School District: (@21,655 Students - 29 Schools) • the budget for the current school year is $170,595,282 ___________________________________________________________________________ The Half Billion Dollar Elephant in Our Schools’ Closets 3 • the annual costs associated with health care benefits for fiscal year (FY) 2009-10 are $18,837,425: $18,412,882 for 1,695 active employees and $424,543 for 124 retirees • the projected total health care benefits costs over the next 30 years are estimated to be $18,239,251 • ARC for FY 2007-08 was $1,245,188 • the retiree health care benefits plan remains open • the retiree health care benefits program is not fully funded • the unfunded health care benefits liability (the liability over the assets deposited into an irrevocably trust fund committed to provide retiree health care benefits) as of June 30, 2008 was $9,688,289: $7,556,534 for active employees and $2,131,755 for retirees

No recommendations for this finding

F04

Fillmore Unified School District: (@3,860 Students - 7 Schools) • the budget for the current school year is $30,444,000 • the annual costs associated with health care benefits are $4,180,000: $3,009,537 for 368 active employees and an estimated $1,170,463 for 71 retirees, as of July 1, 2008 • the projected total health care benefits costs over the next 30 years are expected to be $125,400,000 • does not provide health care benefits for future retirees • ARC for FY 2008-09 is $379,637 • the unfunded health care benefits liability is $2,993,293: $1,822,830 for active employees and $1,170,463 for retirees

No recommendations for this finding

F05

Hueneme Elementary School District: (@7,983 Students - 11 Schools) • the budget for the current school year is $65,477,258 • the annual costs associated with health care benefits are $6,123,426: $5,573,172 for 89 active employees and $550,254 for 69 retirees • there are 540 employees not yet fully eligible for health care benefits • the projected total health care benefits costs over the next 30 years are expected to be $29,107,900 • does not currently provide lifetime health care benefits, however, there are two past superintendents receiving lifetime health care benefits pursuant to their employment contracts • the retiree health care benefits plan remains open • ARC is $1,964,700 ________________________________________________________________ 4 The Half Billion Dollar Elephant in Our Schools’ Closets • the health care benefits plan is not fully funded • the unfunded health care benefits liability is $19,002,100

No recommendations for this finding

F06

Mesa Union Elementary School District (@1,150 Students – 2 Schools) • the budget for the current school year is $4,456,351 • the annual costs associated with health care benefits as of October 31, 2009 are $347,085: $340,692 for 16 active employees and $6,393 for one retiree • the projected total health care benefits costs for retirees over the next 30 years are expected to be $112,286 • the retiree health care benefits plan is closed to all employees hired after January 1, 1999 • there are no retiree dependents participating in a District retiree health care benefits plan • ARC has not been calculated as of January 25, 2010 • the retiree health care benefits plan is not fully funded • the unfunded health care benefits liability is $112,286

No recommendations for this finding

F07

Moorpark Unified School District (@7,324 Students - 11 Schools) • the budget for the current school year is $53,593,367 • the annual costs associated with health care benefits are $7,394,338: $4,783,164 for an estimated 571 active employees and $2,611,174 for 51 retirees • the projected total health care benefits costs over the next 30 years are estimated to be $332,000,000 • the retiree health care benefits plan remains open • ARC is $1,215,947 • the health care benefits plan is not fully funded • the unfunded health care benefits liability is $10,237,363

No recommendations for this finding

F08

Mupu Elementary School District (@127 Students – 1 School) • the budget for the current school year is $986,271 • the annual costs associated with health care benefits are $57,209 as of October 31, 2009 • there are no participants in a District retiree health care benefits plan • does not have any unfunded health care benefits liability

No recommendations for this finding

F09

Oak Park Unified School District (@3,627 Students – 7 Schools) • the budget for the current school year is $28,776,270 ___________________________________________________________________________ The Half Billion Dollar Elephant in Our Schools’ Closets 5 • the annual costs associated with health care benefits for active employees is $3,474,322 • does not provide health care, dental, or vision benefits plans to its retirees • employees who retire from the District with a minimum of 15 years of service and are at least 55 years old may purchase health care benefits from the District at the retiree’s expense. Employees eligible for health care benefits coverage must work a 50% contract or greater. Full time employees are required to enroll in a health care, dental, and vision plan • at the retirees option they may enroll their eligible dependents • does not provide retiree health care benefits coverage to retirees or retiree dependents • does not have any unfunded liability

No recommendations for this finding

F10

Ocean View Elementary School District (@2,508 Students – 4 Schools) • the budget for the current school year is $20,485,501 • the annual costs associated with health care benefits are $2,894,120: $2,613,088 for 259 active employees and $281,032 for 21 retirees • the projected total health care benefits costs over the next 30 years are estimated to be $8,909,363 • the District’s retiree health care benefits plan remains open • ARC is estimated to be $596,164 • the health care benefits plan is not fully funded • the unfunded health care benefits liability is $5,299,520

No recommendations for this finding

F11

Ojai Unified School District (@3,152 Students – 9 Schools) • the budget for the current school year is $22,700,000 • the annual costs associated with health care benefits are $2,789,564: $2,450,719 for 59 active employees and $338,845 for 38 retirees • the projected total health care benefits costs over the next 30 years are expected to be $60,000,000 • the retiree health care benefits plan remains open • ARC as of June 30, 2009 was $1,149,918 • the health care benefits plan is not fully funded • the unfunded health care benefits liability is $7,560,968

No recommendations for this finding

F12

Oxnard Elementary School District (@15,400 Students – 20 Schools) ________________________________________________________________ 6 The Half Billion Dollar Elephant in Our Schools’ Closets • the budget for the current school year is $188,862,281 • the annual costs associated with health care benefits are, $14,248,000: $11,591,000 for 1,088 active employees and $2,657,000 for 257 retirees • the projected total retiree health care benefits costs over the next 30 years are estimated to be $55,496,476 • the retiree health care benefits plan is currently closed • ARC as of June 30, 2009 was $4,072,081 • the retiree health care benefits plan is not fully funded • the unfunded health care benefits liability is estimated to be $55,496,476

No recommendations for this finding

F13

Oxnard Union High School District (@16,885 Students – 9 Schools) • the proposed budget for FY 2009-10 is $140,417,862 • the anticipated FY 2009-10 costs associated with health care benefits are $18,089,344: $12,831,441 for 1,016 active employees and $5,257,903 for 564 retirees • the projected total health care benefits costs on a cash payout basis for retirees only (does not include active employees) over the next 30 years are estimated to be $568,154,000 • provides continued health care benefits for employees hired prior to July 1, 2004 • the pre-1991 retiree health care benefits plan is closed. No additional retirees will be added to this plan • health care benefits coverage is available to active employees, retirees, and retiree’s dependents • ARC as of June 30, 2009 was $18,509,000. $12,114,000 of the amortization payment to fund the $176,754,000 unfunded actuarial liability would remain the same for 30 years, after which time amortization payments would end. $5,523,000 of the ARC is the “Normal Cost” attributed to employee’s service (present value of future benefits) during the fiscal year by active employees. ARC includes $872,000 in interest to the end of the report year • the retiree health care benefits plan is not fully funded • has a trust fund with an actuarial value in assets of $32,621,000, as of July 1, 2008, in investment accounts to draw upon for retiree health care benefits obligations. This leaves an unfunded actuarial accrued liability of $176,754,000

No recommendations for this finding

F14

Pleasant Valley Elementary School District (@7,290 Students – 12 Schools) • the budget for the current school year is $48,065,962 ___________________________________________________________________________ The Half Billion Dollar Elephant in Our Schools’ Closets 7 • the annual costs associated with health care benefits are, $4,496,951: $3,304,079 for 438 active employees and $1,192,872 for 276 retirees • the projected total health care benefits costs over the next 30 years are estimated to be $12,986,325 for retirees only • provides lifetime health care benefits to staff in accordance with the following criteria: employees hired prior to June 30, 1984, with 12 years of o service and are 55 years of age at retirement receive a $3,900 lifetime contribution towards health care benefits employees hired after June 30, 1984, but before June 30, o 1986, with 15 years of service and are 60 years of age at retirement, receive a $2,400 lifetime contribution towards health care benefits • ARC is estimated to be $1,239,155 • the health care benefits plan is not fully funded • the unfunded health care benefits liability is $11,793,453

No recommendations for this finding

F15

Rio Elementary School District (@4,297 Students – 8 Schools) • the budget for the current school year is $34,000,000 • the annual costs associated with health care benefits for FY 2009- 10 are $4,343,444: $3,764,855 for 295 active employees and $578,589 for 58 retirees • the projected total health care benefits costs for retirees only over the next 30 years are estimated to be $15,130,616 • provides lifetime health care benefits to certificated employees hired prior to September 1991, classified employees hired prior to July 1992, and management employees who retired by June 1995 • the retiree health care benefits plan remains open • ARC is $1,005,491 • the health care benefits plan for retirees is not fully funded • an annual audit performed in June 2008 for the District disclosed $15,130,616 in unfunded health care benefits liability • the District has an Employee Retiree Fund in the amount of $4,979,231, leaving an unfunded liability balance of $14,888,769

No recommendations for this finding

F16

Santa Clara Elementary School District (@55 Students – 1 School) • the budget for the current school year is $472,643 • the annual costs associated with health care benefits are $28,812 for active employees as of October 31, 2009 ________________________________________________________________ 8 The Half Billion Dollar Elephant in Our Schools’ Closets • the retiree health care benefits plan is currently closed does not provide retiree health care benefits coverage to retiree dependents • there are no participants in the District’s retiree health care benefit plan • the health care benefits plan is not fully funded; it is on a pay-as- you-go basis • the District does not have an unfunded health care benefits liability

No recommendations for this finding

F17

Santa Paula Elementary School District (@3,712 Students – 7 Schools) • the budget for the current school year is $33,007,651 • the annual cost associated with health care benefits is $3,152,406: $2,955,552 for 348 active employees, and $196,854 for 26 retirees • the projected total health care benefits costs over the next 30 years are estimated to be $94,572,180 • the retiree health care benefits plan remains open • ARC is estimated to be $624,180 • the health care benefit plan is not fully funded • the January 2010 financial statement shows an unfunded accrued liability of $4,478,872

No recommendations for this finding

F18

Santa Paula Union High School District (@1,713 Students – 2 Schools) • the budget for the current school year is $13,076,780 • the annual costs associated with health care benefits are $1,468,116: $1,286,062 for 102 active employees and $182,054 for 16 retirees • the projected total health care benefits costs over the next 30 years are expected to be $3,048,700 • the retiree health care benefits plan remains open • ARC is estimated to be $255,828 • the health care benefits plan is not fully funded • the unfunded health care benefits liability is $2,065,137

No recommendations for this finding

F19

Simi Valley Unified School District (@20,855 Students – 29 Schools) • the budget for the current school year is $153,381,560 • the estimated annual costs associated with health care benefits are $1,423,003: $787,771 for 1,579 active employees and an estimated $635,232 for 90 retirees ___________________________________________________________________________ The Half Billion Dollar Elephant in Our Schools’ Closets 9 • the projected total health care benefits costs over the next 30 years are estimated to be $9,121,325 • the estimated ARC as of June 30, 2008 was $787,771; the actual contribution made by the District during the year was $635,232, which resulted in a net OPEB obligation of $152,539 • the health care benefits plan is not fully funded • the unfunded health care benefits liability amount is $9,121,325 as of June 30, 2008

No recommendations for this finding

F20

Somis Union School District (@485 Students – 2 Schools) • the budget for the current school year is $2,642,763 • the annual costs associated with health care benefits are $199,806 • the projected total health care health care benefits costs over the next 30 years are expected to be $27,690 • the retiree health care benefits plan is closed for all employees hired after October 19, 1988 • there is one current employee who was hired prior to October 19, 1988 who may be eligible to retire with postemployment health care benefits • there are no participants in the retiree health care benefits plan • does not have an ARC established at this time • the retiree health care benefits plan is fully funded • has $27,690 set aside to fund the retiree health care benefits liability • has set aside a Special Reserve Fund for Postemployment Benefits to pay for the liability. The Fund had an ending fund balance of $64,178 as of June 30, 2009

No recommendations for this finding

F21

Ventura Unified School District (@17,371 Students – 30 Schools) • Ventura Unified School District failed to provide the information as requested by the Grand Jury. However, with the information in the actuarial report provided by the Ventura Unified School District, the Grand Jury calculated the estimated amounts for projected total health care costs over the next thirty years and the ARC • the budget for the current school year is $163,386,445 • the annual costs associated with health care benefits are $16,619,294: $14,161,869 for 443 active employees and $2,457,425 for 263 retirees • the projected total health care benefits costs over the next 30 years are estimated to be $34,320,948* • does not offer a paid retirement health care benefits plan for current employees ________________________________________________________________ 10 The Half Billion Dollar Elephant in Our Schools’ Closets • the retiree health care benefits plan has been closed since June 30, 1993 • the District provides health care benefits to employees who retired prior to July 1, 1993 and to their spouses • ARC is estimated to be $1,744,161* • the retiree health care benefit plan that ended in 1993 is not fully funded • the unfunded health care benefits liability reported in the 2009- 2010 budgets is $34,320,948. This total is comprised of $26,812,023 representing the retiree portion of the unfunded health care benefits liability and $7,508,925 for an employee deferred compensation program for all staff employed by the District as of June 30, 1993 • has a reserve fund with a current balance of $34,246 leaving an unfunded liability balance of $34,286,702 * Grand Jury calculated amounts

No recommendations for this finding

F22

Ventura County Community College District (@37,383 Students – 3 Campuses) • the budget for the current school year is $263,218,700 • the annual costs associated with health care benefits are, $20,512,257: $13,426,519 for 797 current active employees and $7,085,738 for 524 retirees • the projected total health care benefits costs over the next 30 years is estimated at $173,733,730 • the District provides lifetime health care, dental, and vision benefits to staff who meet the age and years of service required in accordance with the established criteria • eligibility for the District’s retiree health care benefits plan is closed to all but faculty as of July 1, 2005. Faculty who meet eligibility requirements for District benefits are covered to age 65 • ARC as of December 31, 2008 is $9,616,272 • the health care benefits plan is not fully funded • the unfunded health care benefits liability is $173,733,730: $86,049,728 for active employees who meet the requirements for future retiree benefits and $87,684,002 for current retirees • has funded the health care benefits liability in the amount of $8,568,626 leaving an unfunded health care liability balance of $165,165,104

No recommendations for this finding

F23

Ventura County Office of Education (@1,570 Students – 5 Schools) • the budget for the current fiscal year is $177,351,237 ___________________________________________________________________________ The Half Billion Dollar Elephant in Our Schools’ Closets 11 • the annual cost for health care benefits is $7,744,685: $7,198,751 for 392 current active employees and $545,934 for 51 retirees • the projected total health care benefits costs over the next 30 years are estimated to be $5,276,231 • provides lifetime health care benefits to a closed pool of retirees and their spouses, which does not include dental and vision. At this time, there are 49 retirees and 24 spouses covered • lifetime health care benefits are not provided to current employees • the health care benefits plan is currently closed • health care benefits were offered to VCOE employees who were hired prior to October 1, 1988, and who worked for the VCOE for at least 10 consecutive years and retired prior to July 1, 1995, and whose attained age and service at retirement was equal to or greater than 75 • the ARC is estimated to be $238,565 • the health care benefits plan is not fully funded • has set aside money in a “Special Reserve Fund for Other Than Capital Outlay Projects” (Fund 170). The current balance in the fund is $4,366,616, leaving an unfunded liability of $909,615

No recommendations for this finding

F24

The combined totals for the County School Districts are as follow: COMBINED DISTRICTS TOTALS Total 2009-2010 Budget $1,619,059,185 Est. Total Annual Health Care Benefits Cost $ 138,652,339 Est. Total Annual Retiree Health Care Benefits $ 26,172,305 Cost Est. Total Annual Required Contribution $ 44,644,058 Est. Unfunded Health Care Benefits Liability $ 529,853,272 Est. Total Projected Health Care Benefits Cost $1,545,637,021

No recommendations for this finding

F25

The County School Districts provide continued health care health care benefits to approximately 2,500 retirees and 1,006 retiree dependents.

No recommendations for this finding

F26

The retiree health care benefits plans have been closed for 12 of the 22 school districts.

No recommendations for this finding

F27

Five school districts are fully funded: • Briggs Elementary School District • Mupu Elementary School District • Oak Park Unified School District • Santa Clara Elementary School District • Somis Union School District ________________________________________________________________ 12 The Half Billion Dollar Elephant in Our Schools’ Closets

No recommendations for this finding

F28

There are 17 school districts that do not have a fully-funded health care benefits plan.

Related Recommendations (5)

R01

That County School Districts adopt a policy of prefunding their retiree health care benefits plans by establishing an irrevocable trust fund for employees’ health care benefits. (C-01 through C-03, C-06 through C-07, C-09)

R02

That County School Districts identify effective cost reductions that will allow the District to achieve their respective calculated ARC. (C-02 through C-03, C-06 through C-07, C-09)

R06

That County School Districts schedule sessions to communicate and educate employees, retirees, and parents of students regarding the OPEB issue and how this is being addressed by the district. (C-01, C-02, C-05 through C-09)

R07

That the VCOE and the elected officials of the individual districts take a pro-active role in seeking solutions to the unfunded liability crisis and present these solutions to their districts. (C-01through C-09)

R08

That the VCOE and the elected officials of the individual districts consider alternatives to resolve this serious financial situation, such as: (C-01through C-09) • require greater benefit or premium cost sharing from retirees • implement a new defined contribution type retiree health care program for new employees • freeze the employer-provided portion of the retiree health plan at present levels for currently covered active employees ___________________________________________________________________________ The Half Billion Dollar Elephant in Our Schools’ Closets 15 Responses Responses Required From: Board of Trustees Briggs Elementary School District (R-03 through R-08) Board of Education Conejo Valley Unified school District (R-01 through R-08) Board of Education Fillmore Unified School District (R-01 through R-08) Board of Trustees Hueneme Elementary School District (R-01 through R-08) Board of Trustees Mesa Union Elementary School District (R-01 through R-08) Board of Education Moorpark Unified School District (R-01 through R-08) School Board Mupu Elementary School District (R-03 through R-08) Board of Education Oak Park Unified School District (R-03 through R-08) Governing Board Ocean View Elementary School District (R-01 through R-08) Board of Education Ojai Unified School District (R-01 through R-08) Board of Trustees Oxnard Elementary School District (R-01 through R-08) Board of Trustees Oxnard Union High School District (R-01 through R-08) Board of Trustees Pleasant Valley Elementary School District (R-01 through R-08) Board of Trustees Rio Elementary School District (R-01 through R-08) Board of Trustees Santa Clara Elementary School District (R-03 through R-08) Board of Trustees Santa Paula Elementary School District (R-01 through R-08) Board of Trustees Santa Paula Union High School District (R-01 through R-08) Board of Education Simi Valley Unified School District (R-01 through R-08) Board of Trustees Somis Union School District (R-03 through R-08) Board of Education Ventura Unified School District (R-01 through R-08) Board of Trustees Ventura County Community College District (R-01 through R-08) Board of Education Ventura County Office of Education (R-01 through R-08) References Ref-01. GASB Web Site: The Governmental Accounting Standards Board (GASB) is the independent organization that establishes and improves standards of accounting and financial reporting for U.S. state and local governments. Established in 1984 by agreement of the Financial Accounting Foundation (FAF) and 10 national associations of state and local government officials, the GASB is recognized by governments, the accounting industry, and the capital markets as the official source of generally accepted accounting principles (GAAP) for state and local governments. http://gasb.org Ref-02. Government Accounting Standards Board, Other Postemployment Benefits: A Plain-Language Summary of GASB Statement No. 43 and No.45. http://www.gasb.org/project_pages/opeb_summary.pdf Ref-03. GASB Fact Sheet. http://www.csba.org/Services/Services/DistrictServices/GASB45.aspx Ref-04. OPEB & GASB 45. http://www.treasurer.ca.gov/cdiac/publications/gasb45.pdf Ref-05. GASB 45, Health Care and Public Schools and colleges. ________________________________________________________________ 16 The Half Billion Dollar Elephant in Our Schools’ Closets http://www.cft.org/councils/ccc/pdfs/aboutgasb2.pdf Ref-06. GASB 45 Solutions fact sheet. http://www.bing.com/search?q=GASB45+Solutions+fact+sheet&form =QBLH&qs=n Ref-07. Government Accounting Standards Board, Summaries/Status, Summary of Statement 45. http://www.gasb.org/st/summary/gstsm45.html Ref-08. FASB Web Site: Since 1973, the Financial Accounting Standards Board (FASB) has been the designated organization in the private sector for establishing standards of financial accounting. Those standards govern the preparation of financial statements. They are officially recognized as authoritative by the Securities and Exchange Commission (SEC).Such standards are important to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. http://www.fasb.org/home Ref-09. Local Government and School Accountability; New York State Office of the Comptroller. http://www.osc.state.ny.us/localgov/pubs/opeb45faqs.htm Ref-10. The PEW center On The States. http://www.pewcenteronthestates.org/report_detail.aspx?id=56695 Ref-11. The Trillion Dollar Gap. http://downloads.pewcenteronthestates.org/The_Trillion_Dollar_Gap_fi nal.pdf Ref-12. California Community Colleges Systems Office, Accounting Advisory GASB 45. http://www.cccco.edu/Portals/4/CFFP/Fiscal/Standards/acc_advisories /FS_08-02_GASB_45_Accounting_Advisory.pdf Ref-13. NEW FINANCIAL REPORTING REQUIREMENTS FOR POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS – www.cde.ca.gov/fg/ac/co/documents/gasb45opeb.doc - Ref-14. Citi Institutional Consulting, GASB 45 and Other Postemployment Benefits: Understanding the Government Landscape. http://www.wiopeb.com/cms_files/resources/gasb45_opeb_white_pap er.pdf Ref-15. LAO Retiree Health Care: A growing Cost For Government. http://www.lao.ca.gov/2006/ret_hlthcare/retiree_healthcare_021706. pdf Ref-16. SANTA MARIA JOINT UNION HIGH SCHOOL DISTRICT BOARD OF TRUSTEES http://www.smjuhsd.k12.ca.us/support_services/bb/agendas/combine d%20agenda%202-14-07.pdf Ref-17. Source for student enrollment and number of schools information: Ventura County Public Schools Directory 2009-2010. ___________________________________________________________________________ The Half Billion Dollar Elephant in Our Schools’ Closets 17 (http://schooldirectory.vcss.k12.ca.us/directory.pdf) Ref-18. Focus On Education, Ventura County Office of Education – winter 2010 http://www.vcoe.org/LinkClick.aspx?fileticket=ZuxAnzm1ytU%3d&tabi d=314&mid=1785 Ref-19. Oak Park Unified School District accepts student transfers April,25, 2001. http://articles.latimes.com/2001/apr/25/local/me-55308 DATE?? http://www.theacorn.com/news/2010-02- 18/Front_Page/Outoftown_students_enroll.html Ref-20. Oak Park council concerned over growing school traffic April, 24, 2010. http://www.vcstar.com/news/2010/mar/24/oak-park-council- concerned-about-increasing/ Ref-21. Los Angeles Unified School District plans to stop transfers March, 15, 2010. http://www.dailybreeze.com/news/ci_14666887?source=rss Ref-22. Los Angeles Unified School District to stop most student transfers March, 15, 2010. http://www.dailybreeze.com/news/ci_14666887 Ref-23. Santa Paula Elementary makes list of financially ailing districts April, 22, 2010. http://www.vcstar.com/news/2010/mar/22/santa-paula-elementary- makes-list-of-financially/ Ref-24. USA Today, Average family health insurance policy: $13,375, up 5%, September 15, 2009. http://www.usatoday.com/money/industries/health/2009-09-15- insurance-costs_N.htm Ref-25. Health Populi-Health Care Costs Will Increase At Double-Digest Rates. In 2010 http://www.healthpopuli.com/2009/06/health-care-costs-will- increase-at Ref-26. Health Care Finance News June, 18, 2009. http://www.healthcarefinancenews.com/news/employers-should- expect-healthcare-costs-increase-9-percent-2010 Ref-27. Braun, Carl F. Objective Accounting: A Problem of Communication – 1953, Alhambra, California C. F. Braun & Company. Glossary Accrual Accounting - A method of accounting whereby income and expense items are recognized and recorded when income is earned and expense is incurred, regardless of when cash is actually received or paid. Actuarial Accrued Liability (AAL) - The portion of the actuarially determined present value of benefits allocated to the prior service already performed by the covered employees. ________________________________________________________________ 18 The Half Billion Dollar Elephant in Our Schools’ Closets Annual OPEB Expense - The amount recognized by an employer in each accounting period for contributions to a defined benefit OPEB plan on the modified accrual basis of accounting. Annual Required Contribution (ARC) – GASB 45 requires that the actuarially determined amount of retiree healthcare expense be recorded as a current year expense. It is comprised of the amount that should be set aside to fund retiree health benefits earned during the current year plus the amount necessary to amortize the unfunded AAL over not more than 30 years. Normal Cost – The amount of the benefit earned in the current year in exchange for current services for active employees who are eligible or will be eligible for post-employment benefits. Other Postemployment Benefits (OPEB) – Generally take the form of health care insurance and dental, vision, prescription, or other health care benefits provided to eligible retirees, including, in some cases, their beneficiaries. It may also include some types of life insurance, legal services, and other benefits. Projected Total Health Care Benefit Costs Over the Next Thirty Years – The required contribution for the year is calculated in accordance with certain parameters, and includes the normal costs for the year and a component for the amortization of the total unfunded actuarial accrued liabilities. Unfunded Actuarial Accrued Liability (UAAL) – The amount of projected future benefits for the past service of current employees and retirees that has not been funded. Attachments Att-01 County Schools Selected Financial Information and Medical Benefits Obligations 2009-2010 ___________________________________________________________________________ The Half Billion Dollar Elephant in Our Schools’ Closets 19 (This page intentionally blank) ________________________________________________________________ 20 The Half Billion Dollar Elephant in Our Schools’ Closets Attachment-01 County Schools Selected Financial Information and Medical Benefits Obligations 2009-2010 ___________________________________________________________________________ The Half Billion Dollar Elephant in Our Schools’ Closets 21 ` County Schools Selected Financial Information and Medical Benefits Obligations 2009-2010 11 Is the Is The 3 5 10 Number Retiree Retiree 1 2 A R C Are 6 7 N u mber 9 E s t i mated Projected Health 4 Of Health Medical The Estimated Unfunded Estimated Annual % Health Are Are Retiree Of 8 Health Estimated Retiree Health Care Benefit Costs For Districts Total Budget Retirees Care Benefits Accrued Health Care Required of The care Retirees Dependents Retires Care Benefit Cost for 2009 Care Benefits Costs for Currently Active Employees 2009 / 2010 Dependents Benefits Plan Fully Benefits Liability Contribution (ARC) Total Benefits Covered Covered Covered 2009 & Retirees Over The Next Covered Option Funded Budget Provided Thirty Years Open or Closed 1 Briggs Elementary School District Yes $0.00 $0.00 0.00% $3,661,001.00 Yes No No 0 0 ** $228,732.00 $0.00 $0.00 Closed 2 Conejo Valley Unified School District No $9,688,289.00 $1,245,188.00 0.73% $170,595,282.00 Yes Yes No 124 0 $18,837,425.00 $424,543.00 $18,239,251.00 Open 3 Fillmore Unified School District No $2,993,293.00 $379,637.00 1.25% $30,444,000.00 Yes Yes No 71 0 $4,180,000.00 * $1,170,463.00 $125,400,000.00 Closed 4 Hueneme Elementary School District No $19,002,100.00 $1,964,700.00 3.00% $65,477,258.00 Yes Yes Yes 69 53 $6,123,426.00 $550,254.00 $29,107,900.00 Open 5 Mesa Union Elementary School District No $112,286.00 $0.00 0.00% $4,456,351.00 Yes Yes Yes 1 0 $347,085.00 $6,393.00 *** $112,286.00 Closed 6 Moorpark Unified School District No $10,237,363.00 $1,215,947.00 2.27% $53,593,367.00 Yes Yes Yes 51 37 $7,394,338.00 * $2,611,174.00 $332,000,000.00 Open 7 Mupu Elementary School District Yes $0.00 $0.00 0.00% $986,271.00 Yes No No 0 0 $57,209.00 $0.00 $0.00 Closed 8 Oak Park Unified School District Yes $0.00 $0.00 0.00% $28,776,270.00 Yes No No 0 0 ** $3,474,322.00 $0.00 $0.00 Closed 9 Ocean View Elementary School District No $5,299,520.00 $596,164.00 2.91% $20,485,501.00 Yes Yes Yes 21 21 $2,894,120.00 $281,032.00 $8,909,363.00 Open 10 Ojai Unified School District No $7,560,968.00 $1,149,918.00 5.07% $22,700,000.00 Yes Yes Yes 38 34 $2,789,564.00 $338,845.00 $60,000,000.00 Open 11 Oxnard Elementary School District No * $55,496,476.00 $4,072,081.00 2.16% $188,862,281.00 Yes Yes Yes 257 171 $14,248,000.00 $2,657,000.00 *** $55,496,476.00 Closed 12 Oxnard Union High School District No $176,754,000.00 $18,509,000.00 13.18% $140,417,862.00 Yes Yes Yes 564 not available $18,089,344.00 $5,257,903.00 *** $568,154,000.00 Closed 13 Pleasant Valley Elementary School District No $11,793,453.00 $1,239,155.00 2.58% $48,065,962.00 Yes Yes Yes 276 56 $4,496,951.00 $1,192,872.00 *** $12,986,325.00 Open 14 Rio Elementary School District No $14,888,769.00 $1,005,491.00 2.96% $34,000,000.00 Yes Yes Yes 58 50 $4,343,444.00 $578,589.00 *** $15,130,616.00 Open 15 Santa Clara Elementary School District Yes $0.00 $0.00 0.00% $472,643.00 Yes No No 0 0 ** $28,812.00 $0.00 $0.00 Closed 16 Santa Paula Elementary School District No $4,478,872.00 $624,180.00 1.89% $33,007,651.00 Yes Yes Yes 26 25 $3,152,406.00 $196,854.00 $94,572,180.00 Open 17 Santa Paula Union High School District No $2,065,137.00 $255,828.00 1.96% $13,076,780.00 Yes Yes Yes 16 12 $1,468,116.00 $182,054.00 $3,048,700.00 Open 18 Simi Valley Unified School District No $9,121,325.00 $787,771.00 0.51% $153,381,560.00 Yes Yes No 90 0 * $1,423,003.000 * $635,232.00 $9,121,325.00 Open 19 Somis Union Elementary School District Yes $0.00 $0.00 0.00% $2,642,763.00 Yes No No 0 0 $199,806.00 $0.00 $27,690.00 Closed 20 Ventura County Community College District No $165,165,104.00 $9,616,272.00 3.65% $263,218,700.00 Yes Yes Yes 524 374 $20,512,257.00 $7,085,738.00 $173,733,730.00 Closed 21 Ventura County Office of Education No $909,615.00 $238,565.00 0.13% $177,351,237.00 Yes Yes Yes 51 26 $7,744,685.00 $545,934.00 $5,276,231.00 Closed 22 Ventura Unified School District No $34,286,702.00 * $1,744,161.00 1.07% $163,386,445.00 Yes Yes Yes 263 147 $16,619,294.00 $2,457,425.00 * $34,320,948.00 Closed Total 17/5 $529,853,272.00 $44,644,058.00 2.76% $1,619,059,185.00 2,500 1,006 $138,652,339.00 $26,172,305.00 $1,545,637,021.00 10 / 12 * Source: Estimates derived from the actuarial reports provided by the school district. ** Currently active employees only. *** Retirees only. The Unfunded Accrued Health Care Benefits Liability - the unfunded liability is based on a “snapshot” in time of the value of projected future benefits for the past service of current employees and retirees that has not been funded 2 Annual Required Contribution (ARC) - the employer's required contribution for the year, includes the normal cost for the year and a component for amortization of the total unfunded accrued health care benefits liabilities of the plan over a period not to exceed thirty years. ARC % of the Total Budget - this represents the portion of the VCPSD, the VCCCD, and the VCOE budget that should be allocated to the ARC each year. Total Budget 2009/ 2010 - this represents the total number of dollars committed to the 2009 / 2010 school years for the VCPSD, the VCCCD, and the VCOE. Are Health Care Benefits Provided - does the VCPSD, the VCCCD, and the VCOE currently provide health care benefits to active employees. Are Retirees Covered - does the VCPSD, the VCCCD, and the VCOE proved health care benefits to retirees. Are Retiree Dependents Covered - does the VCPSD, the VCCCD, and the VCOE proved health care benefits to retirees dependents. Health Care Benefits Costs for 2009 / 2010 - the anticipated the total number of dollars for the health care benefits during the 2009 / 2010 school years for the VCPSD, the VCCCD, and the VCOE. Retiree Health Care Benefits Cost for 2009 / 2010 - the anticipated the total number of dollars for the health care benefits for retirees during the 2009 / 2010 school 10 Projected Health Care Benefits Costs for Currently Active & Retirees Over the Next Thirty Years - the anticipated the total number of dollars for the health care benefits for currently active employees & retirees during the next thirty years. 6/14/2010 1 of 1

F29

Credit rating agencies have stated that they will consider OPEB funding status in their evaluations of government financial condition. [Ref-09, Ref-12 through Ref-14, Ref-16]

No recommendations for this finding

F30

Included in the required GASB 45 actuarial reports provided by the consultants were the following recommendations: • that it is necessary or even desirable for an agency to establish a policy of funding exactly the ARC on a cash basis each year • the agencies adopt a policy of pre-funding their retiree health care plan as soon as possible • establish an irrevocable trust fund for employee’s health care benefits

Related Recommendations (1)

R01

That County School Districts adopt a policy of prefunding their retiree health care benefits plans by establishing an irrevocable trust fund for employees’ health care benefits. (C-01 through C-03, C-06 through C-07, C-09)

F31

Student enrollment in the County as determined by the State through a complicated formula called Average Daily Attendance (ADA) has declined a total of 3,775 students over the past five years: [Ref-17, Ref-18] Average Daily Attendance VCSPD 137,000 135,956 136,000 134,670 135,000 133,841 134,000 132,958 133,000 132,181 132,000 131,000 130,000 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

No recommendations for this finding

F32

Several school districts are accepting out-of-district student transfers in an effort to increase ADA. [Ref-19 through Ref-22]

No recommendations for this finding

F33

On March 22, 2010, the California Department of Education placed 126 school districts on a fiscal early warning list, an increase of 17% over last year. [Ref-23]

No recommendations for this finding

F34

According to the State, the Santa Paula Elementary School District might not be able to meet its financial obligations over the next few years because of the ongoing budget crises and cuts to education funding. Santa Paula Elementary School District informed the VCOE that is was in fiscal trouble after realizing it was facing a $3.2 million ___________________________________________________________________________ The Half Billion Dollar Elephant in Our Schools’ Closets 13 shortfall this fiscal year. The District has increased class sizes, trimmed management, and eliminated 31 teaching and 46 classified positions. [Ref-23]

No recommendations for this finding

F35

The VCOE anticipates the next fiscal warning list will be even longer, possibly adding Hueneme Elementary School District and Rio Elementary School District to future lists. [Ref-23]

No recommendations for this finding

F36

The continued increase in the cost of health care and health care insurance can only be expected to contribute to the increase in the size of the County School Districts unfunded liability. Since 1999, health insurance premiums for families rose 131%, far more than the general rate of inflation, which increased 28% over the same period. Health care costs will increase 9% in 2010 according to Health Care Finance News. [Ref-15, Ref-24 through Ref-26]

Related Recommendations (5)

R02

That County School Districts identify effective cost reductions that will allow the District to achieve their respective calculated ARC. (C-02 through C-03, C-06 through C-07, C-09)

R03

That County School Districts leverage off of the economies of scale by acting as one bargaining unit and selecting a health care plan for all employees. (C-05, C-07)

R06

That County School Districts schedule sessions to communicate and educate employees, retirees, and parents of students regarding the OPEB issue and how this is being addressed by the district. (C-01, C-02, C-05 through C-09)

R07

That the VCOE and the elected officials of the individual districts take a pro-active role in seeking solutions to the unfunded liability crisis and present these solutions to their districts. (C-01through C-09)

R08

That the VCOE and the elected officials of the individual districts consider alternatives to resolve this serious financial situation, such as: (C-01through C-09) • require greater benefit or premium cost sharing from retirees • implement a new defined contribution type retiree health care program for new employees • freeze the employer-provided portion of the retiree health plan at present levels for currently covered active employees ___________________________________________________________________________ The Half Billion Dollar Elephant in Our Schools’ Closets 15 Responses Responses Required From: Board of Trustees Briggs Elementary School District (R-03 through R-08) Board of Education Conejo Valley Unified school District (R-01 through R-08) Board of Education Fillmore Unified School District (R-01 through R-08) Board of Trustees Hueneme Elementary School District (R-01 through R-08) Board of Trustees Mesa Union Elementary School District (R-01 through R-08) Board of Education Moorpark Unified School District (R-01 through R-08) School Board Mupu Elementary School District (R-03 through R-08) Board of Education Oak Park Unified School District (R-03 through R-08) Governing Board Ocean View Elementary School District (R-01 through R-08) Board of Education Ojai Unified School District (R-01 through R-08) Board of Trustees Oxnard Elementary School District (R-01 through R-08) Board of Trustees Oxnard Union High School District (R-01 through R-08) Board of Trustees Pleasant Valley Elementary School District (R-01 through R-08) Board of Trustees Rio Elementary School District (R-01 through R-08) Board of Trustees Santa Clara Elementary School District (R-03 through R-08) Board of Trustees Santa Paula Elementary School District (R-01 through R-08) Board of Trustees Santa Paula Union High School District (R-01 through R-08) Board of Education Simi Valley Unified School District (R-01 through R-08) Board of Trustees Somis Union School District (R-03 through R-08) Board of Education Ventura Unified School District (R-01 through R-08) Board of Trustees Ventura County Community College District (R-01 through R-08) Board of Education Ventura County Office of Education (R-01 through R-08) References Ref-01. GASB Web Site: The Governmental Accounting Standards Board (GASB) is the independent organization that establishes and improves standards of accounting and financial reporting for U.S. state and local governments. Established in 1984 by agreement of the Financial Accounting Foundation (FAF) and 10 national associations of state and local government officials, the GASB is recognized by governments, the accounting industry, and the capital markets as the official source of generally accepted accounting principles (GAAP) for state and local governments. http://gasb.org Ref-02. Government Accounting Standards Board, Other Postemployment Benefits: A Plain-Language Summary of GASB Statement No. 43 and No.45. http://www.gasb.org/project_pages/opeb_summary.pdf Ref-03. GASB Fact Sheet. http://www.csba.org/Services/Services/DistrictServices/GASB45.aspx Ref-04. OPEB & GASB 45. http://www.treasurer.ca.gov/cdiac/publications/gasb45.pdf Ref-05. GASB 45, Health Care and Public Schools and colleges. ________________________________________________________________ 16 The Half Billion Dollar Elephant in Our Schools’ Closets http://www.cft.org/councils/ccc/pdfs/aboutgasb2.pdf Ref-06. GASB 45 Solutions fact sheet. http://www.bing.com/search?q=GASB45+Solutions+fact+sheet&form =QBLH&qs=n Ref-07. Government Accounting Standards Board, Summaries/Status, Summary of Statement 45. http://www.gasb.org/st/summary/gstsm45.html Ref-08. FASB Web Site: Since 1973, the Financial Accounting Standards Board (FASB) has been the designated organization in the private sector for establishing standards of financial accounting. Those standards govern the preparation of financial statements. They are officially recognized as authoritative by the Securities and Exchange Commission (SEC).Such standards are important to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. http://www.fasb.org/home Ref-09. Local Government and School Accountability; New York State Office of the Comptroller. http://www.osc.state.ny.us/localgov/pubs/opeb45faqs.htm Ref-10. The PEW center On The States. http://www.pewcenteronthestates.org/report_detail.aspx?id=56695 Ref-11. The Trillion Dollar Gap. http://downloads.pewcenteronthestates.org/The_Trillion_Dollar_Gap_fi nal.pdf Ref-12. California Community Colleges Systems Office, Accounting Advisory GASB 45. http://www.cccco.edu/Portals/4/CFFP/Fiscal/Standards/acc_advisories /FS_08-02_GASB_45_Accounting_Advisory.pdf Ref-13. NEW FINANCIAL REPORTING REQUIREMENTS FOR POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS – www.cde.ca.gov/fg/ac/co/documents/gasb45opeb.doc - Ref-14. Citi Institutional Consulting, GASB 45 and Other Postemployment Benefits: Understanding the Government Landscape. http://www.wiopeb.com/cms_files/resources/gasb45_opeb_white_pap er.pdf Ref-15. LAO Retiree Health Care: A growing Cost For Government. http://www.lao.ca.gov/2006/ret_hlthcare/retiree_healthcare_021706. pdf Ref-16. SANTA MARIA JOINT UNION HIGH SCHOOL DISTRICT BOARD OF TRUSTEES http://www.smjuhsd.k12.ca.us/support_services/bb/agendas/combine d%20agenda%202-14-07.pdf Ref-17. Source for student enrollment and number of schools information: Ventura County Public Schools Directory 2009-2010. ___________________________________________________________________________ The Half Billion Dollar Elephant in Our Schools’ Closets 17 (http://schooldirectory.vcss.k12.ca.us/directory.pdf) Ref-18. Focus On Education, Ventura County Office of Education – winter 2010 http://www.vcoe.org/LinkClick.aspx?fileticket=ZuxAnzm1ytU%3d&tabi d=314&mid=1785 Ref-19. Oak Park Unified School District accepts student transfers April,25, 2001. http://articles.latimes.com/2001/apr/25/local/me-55308 DATE?? http://www.theacorn.com/news/2010-02- 18/Front_Page/Outoftown_students_enroll.html Ref-20. Oak Park council concerned over growing school traffic April, 24, 2010. http://www.vcstar.com/news/2010/mar/24/oak-park-council- concerned-about-increasing/ Ref-21. Los Angeles Unified School District plans to stop transfers March, 15, 2010. http://www.dailybreeze.com/news/ci_14666887?source=rss Ref-22. Los Angeles Unified School District to stop most student transfers March, 15, 2010. http://www.dailybreeze.com/news/ci_14666887 Ref-23. Santa Paula Elementary makes list of financially ailing districts April, 22, 2010. http://www.vcstar.com/news/2010/mar/22/santa-paula-elementary- makes-list-of-financially/ Ref-24. USA Today, Average family health insurance policy: $13,375, up 5%, September 15, 2009. http://www.usatoday.com/money/industries/health/2009-09-15- insurance-costs_N.htm Ref-25. Health Populi-Health Care Costs Will Increase At Double-Digest Rates. In 2010 http://www.healthpopuli.com/2009/06/health-care-costs-will- increase-at Ref-26. Health Care Finance News June, 18, 2009. http://www.healthcarefinancenews.com/news/employers-should- expect-healthcare-costs-increase-9-percent-2010 Ref-27. Braun, Carl F. Objective Accounting: A Problem of Communication – 1953, Alhambra, California C. F. Braun & Company. Glossary Accrual Accounting - A method of accounting whereby income and expense items are recognized and recorded when income is earned and expense is incurred, regardless of when cash is actually received or paid. Actuarial Accrued Liability (AAL) - The portion of the actuarially determined present value of benefits allocated to the prior service already performed by the covered employees. ________________________________________________________________ 18 The Half Billion Dollar Elephant in Our Schools’ Closets Annual OPEB Expense - The amount recognized by an employer in each accounting period for contributions to a defined benefit OPEB plan on the modified accrual basis of accounting. Annual Required Contribution (ARC) – GASB 45 requires that the actuarially determined amount of retiree healthcare expense be recorded as a current year expense. It is comprised of the amount that should be set aside to fund retiree health benefits earned during the current year plus the amount necessary to amortize the unfunded AAL over not more than 30 years. Normal Cost – The amount of the benefit earned in the current year in exchange for current services for active employees who are eligible or will be eligible for post-employment benefits. Other Postemployment Benefits (OPEB) – Generally take the form of health care insurance and dental, vision, prescription, or other health care benefits provided to eligible retirees, including, in some cases, their beneficiaries. It may also include some types of life insurance, legal services, and other benefits. Projected Total Health Care Benefit Costs Over the Next Thirty Years – The required contribution for the year is calculated in accordance with certain parameters, and includes the normal costs for the year and a component for the amortization of the total unfunded actuarial accrued liabilities. Unfunded Actuarial Accrued Liability (UAAL) – The amount of projected future benefits for the past service of current employees and retirees that has not been funded. Attachments Att-01 County Schools Selected Financial Information and Medical Benefits Obligations 2009-2010 ___________________________________________________________________________ The Half Billion Dollar Elephant in Our Schools’ Closets 19 (This page intentionally blank) ________________________________________________________________ 20 The Half Billion Dollar Elephant in Our Schools’ Closets Attachment-01 County Schools Selected Financial Information and Medical Benefits Obligations 2009-2010 ___________________________________________________________________________ The Half Billion Dollar Elephant in Our Schools’ Closets 21 ` County Schools Selected Financial Information and Medical Benefits Obligations 2009-2010 11 Is the Is The 3 5 10 Number Retiree Retiree 1 2 A R C Are 6 7 N u mber 9 E s t i mated Projected Health 4 Of Health Medical The Estimated Unfunded Estimated Annual % Health Are Are Retiree Of 8 Health Estimated Retiree Health Care Benefit Costs For Districts Total Budget Retirees Care Benefits Accrued Health Care Required of The care Retirees Dependents Retires Care Benefit Cost for 2009 Care Benefits Costs for Currently Active Employees 2009 / 2010 Dependents Benefits Plan Fully Benefits Liability Contribution (ARC) Total Benefits Covered Covered Covered 2009 & Retirees Over The Next Covered Option Funded Budget Provided Thirty Years Open or Closed 1 Briggs Elementary School District Yes $0.00 $0.00 0.00% $3,661,001.00 Yes No No 0 0 ** $228,732.00 $0.00 $0.00 Closed 2 Conejo Valley Unified School District No $9,688,289.00 $1,245,188.00 0.73% $170,595,282.00 Yes Yes No 124 0 $18,837,425.00 $424,543.00 $18,239,251.00 Open 3 Fillmore Unified School District No $2,993,293.00 $379,637.00 1.25% $30,444,000.00 Yes Yes No 71 0 $4,180,000.00 * $1,170,463.00 $125,400,000.00 Closed 4 Hueneme Elementary School District No $19,002,100.00 $1,964,700.00 3.00% $65,477,258.00 Yes Yes Yes 69 53 $6,123,426.00 $550,254.00 $29,107,900.00 Open 5 Mesa Union Elementary School District No $112,286.00 $0.00 0.00% $4,456,351.00 Yes Yes Yes 1 0 $347,085.00 $6,393.00 *** $112,286.00 Closed 6 Moorpark Unified School District No $10,237,363.00 $1,215,947.00 2.27% $53,593,367.00 Yes Yes Yes 51 37 $7,394,338.00 * $2,611,174.00 $332,000,000.00 Open 7 Mupu Elementary School District Yes $0.00 $0.00 0.00% $986,271.00 Yes No No 0 0 $57,209.00 $0.00 $0.00 Closed 8 Oak Park Unified School District Yes $0.00 $0.00 0.00% $28,776,270.00 Yes No No 0 0 ** $3,474,322.00 $0.00 $0.00 Closed 9 Ocean View Elementary School District No $5,299,520.00 $596,164.00 2.91% $20,485,501.00 Yes Yes Yes 21 21 $2,894,120.00 $281,032.00 $8,909,363.00 Open 10 Ojai Unified School District No $7,560,968.00 $1,149,918.00 5.07% $22,700,000.00 Yes Yes Yes 38 34 $2,789,564.00 $338,845.00 $60,000,000.00 Open 11 Oxnard Elementary School District No * $55,496,476.00 $4,072,081.00 2.16% $188,862,281.00 Yes Yes Yes 257 171 $14,248,000.00 $2,657,000.00 *** $55,496,476.00 Closed 12 Oxnard Union High School District No $176,754,000.00 $18,509,000.00 13.18% $140,417,862.00 Yes Yes Yes 564 not available $18,089,344.00 $5,257,903.00 *** $568,154,000.00 Closed 13 Pleasant Valley Elementary School District No $11,793,453.00 $1,239,155.00 2.58% $48,065,962.00 Yes Yes Yes 276 56 $4,496,951.00 $1,192,872.00 *** $12,986,325.00 Open 14 Rio Elementary School District No $14,888,769.00 $1,005,491.00 2.96% $34,000,000.00 Yes Yes Yes 58 50 $4,343,444.00 $578,589.00 *** $15,130,616.00 Open 15 Santa Clara Elementary School District Yes $0.00 $0.00 0.00% $472,643.00 Yes No No 0 0 ** $28,812.00 $0.00 $0.00 Closed 16 Santa Paula Elementary School District No $4,478,872.00 $624,180.00 1.89% $33,007,651.00 Yes Yes Yes 26 25 $3,152,406.00 $196,854.00 $94,572,180.00 Open 17 Santa Paula Union High School District No $2,065,137.00 $255,828.00 1.96% $13,076,780.00 Yes Yes Yes 16 12 $1,468,116.00 $182,054.00 $3,048,700.00 Open 18 Simi Valley Unified School District No $9,121,325.00 $787,771.00 0.51% $153,381,560.00 Yes Yes No 90 0 * $1,423,003.000 * $635,232.00 $9,121,325.00 Open 19 Somis Union Elementary School District Yes $0.00 $0.00 0.00% $2,642,763.00 Yes No No 0 0 $199,806.00 $0.00 $27,690.00 Closed 20 Ventura County Community College District No $165,165,104.00 $9,616,272.00 3.65% $263,218,700.00 Yes Yes Yes 524 374 $20,512,257.00 $7,085,738.00 $173,733,730.00 Closed 21 Ventura County Office of Education No $909,615.00 $238,565.00 0.13% $177,351,237.00 Yes Yes Yes 51 26 $7,744,685.00 $545,934.00 $5,276,231.00 Closed 22 Ventura Unified School District No $34,286,702.00 * $1,744,161.00 1.07% $163,386,445.00 Yes Yes Yes 263 147 $16,619,294.00 $2,457,425.00 * $34,320,948.00 Closed Total 17/5 $529,853,272.00 $44,644,058.00 2.76% $1,619,059,185.00 2,500 1,006 $138,652,339.00 $26,172,305.00 $1,545,637,021.00 10 / 12 * Source: Estimates derived from the actuarial reports provided by the school district. ** Currently active employees only. *** Retirees only. The Unfunded Accrued Health Care Benefits Liability - the unfunded liability is based on a “snapshot” in time of the value of projected future benefits for the past service of current employees and retirees that has not been funded 2 Annual Required Contribution (ARC) - the employer's required contribution for the year, includes the normal cost for the year and a component for amortization of the total unfunded accrued health care benefits liabilities of the plan over a period not to exceed thirty years. ARC % of the Total Budget - this represents the portion of the VCPSD, the VCCCD, and the VCOE budget that should be allocated to the ARC each year. Total Budget 2009/ 2010 - this represents the total number of dollars committed to the 2009 / 2010 school years for the VCPSD, the VCCCD, and the VCOE. Are Health Care Benefits Provided - does the VCPSD, the VCCCD, and the VCOE currently provide health care benefits to active employees. Are Retirees Covered - does the VCPSD, the VCCCD, and the VCOE proved health care benefits to retirees. Are Retiree Dependents Covered - does the VCPSD, the VCCCD, and the VCOE proved health care benefits to retirees dependents. Health Care Benefits Costs for 2009 / 2010 - the anticipated the total number of dollars for the health care benefits during the 2009 / 2010 school years for the VCPSD, the VCCCD, and the VCOE. Retiree Health Care Benefits Cost for 2009 / 2010 - the anticipated the total number of dollars for the health care benefits for retirees during the 2009 / 2010 school 10 Projected Health Care Benefits Costs for Currently Active & Retirees Over the Next Thirty Years - the anticipated the total number of dollars for the health care benefits for currently active employees & retirees during the next thirty years. 6/14/2010 1 of 1

F37

C. F. Braun states that sole reason for a financial report is to serve the user. Accounting reports are a measuring report of performance. They must be easy to read and understand. [Ref-27] Conclusions C-01. County School Districts have a substantial unfunded health care benefits obligation of $529,853,272. (F-02 through F-24) C-02. County School Districts have a substantial ARC of $44,644,058. (F-02 through F-24) C-03. Failure on the part of the County School Districts to take steps to address these liabilities may result in downgrades to their credit rating, thereby increasing future borrowing costs resulting in increased costs to the taxpayers. (F-29) C-04. The County School Districts have been paying for retiree health care benefits in the year the benefits were used by the retirees. This is called the pay-as-you-go approach, which differs from the prefunding model where costs are funded in advance during employees’ working years and invested until paid to retirees. The pay-as-you-go approach has led to the accumulation of the financial liabilities to pay for future retiree health care benefits. (F-02 through F-30) C-05. The County School Districts offer varying levels of health care benefits to employees and retirees. They have not joined together to form a single large bargaining unit. (F-02 through F-24, F-34) C-06. The County School District’s half billion dollar unfunded liability should no longer be ignored; it will not decrease on its own. (F-30, F-33 through F-36) C-07. Based on historical data, the cost of health care and health care insurance will continue to outpace typical annual inflation. (F-36) C-08. The County School Districts have not been proactive in planning for or dealing with challenging financial conditions. (F-02 through F-24, F-33 through F-36) ________________________________________________________________ 14 The Half Billion Dollar Elephant in Our Schools’ Closets C-09. There may be unintended consequences as a result of the choices and decisions made by the County School Districts to address the half billion dollars in unfunded health care liabilities. (F-02 through F-36) C-10. The time for the County School Districts to make difficult choices is now. Regardless of the choices, the financial burden rests squarely on the shoulders of the taxpayer. (F-02 through F-36) Recommendations

Related Recommendations (2)

R04

That County School Districts use language in their financial reports so that the average County taxpayer, employee, and retiree can understand how tax dollars are being spent and recognize the extent of the district’s financial indebtedness. (C-06, C-08)

R05

That County School Districts place the entire district budget on the district website. (C-06, C-08)

The Half Billion Dollar Elephant in Our Schools’ Closets

Findings and Recommendations 37 findings

Conclusions 2

Agency Responses 6

No Responses Found 14