San Luis Obispo County Grand Jury • 2013-2014 • Agency Response
Response to: RestaurantFINAL

County of San Luis Obispo Board of Supervisors Agenda Item Transmittal (3) Contact/phone (2) Meeting Date (1)*

Published: September 05, 2014 9 pages
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Findings and Recommendations 2 findings

F1 Page 1
"Although it is consistent with general accepted accounting practices, the unfunded liability is recorded in the notes of the financial statements which make it difficult to understand the totality of unfunded obligations for San Luis Obispo County." Auditor-Controller-Treasurer-Tax Collector Response: I agree that pension calculations can be difficult to understand, however, financial statements continue to evolve in an effort to make them more comprehensive and As mentioned above, in accordance with newly issued GASB understandable. Statement 68 the Net Pension Liability will be recorded in County's financial statements beginning FY 2014-15, in addition to the current GASB requirement to present the Net Pension Liability in the notes to the financial statements and Required Supplementary Information. The County will comply with the GASB reporting requirements and the required implementation timeline. Grand Jury
Related Recommendations (1)
R1
Page 1
"The Pension Trust administrator and the Auditor-Controller-Treasurer should make available to the Board of Supervisors and the residents of San Luis Obispo County an additional simplified transparent reporting of the totality of the county's pension obligation." Auditor-Controller-Treasurer-Tax Collector Response: I partially agree with this recommendation. Determining funding requirements for pensions is a complicated, ever changing calculation performed by actuaries. While it would be difficult to simplify the reporting, there are some changes we can make that will help present the pension obligation with more history in one document. As previously mentioned the implementation of GASB 68 in FY 2014-15 is intended to provide additional transparency to pension reporting. Currently, there is a table in the CAFR under "Required Supplementary Information" (Attachment 2) which may have been overlooked by the Grand Jury. This table clearly presents the County's total pension obligation over the last three years. GASB 68 requires that the table be expanded from the current 3 years of pension history to include 10 years of pension The reader can see the annual changes in the County's total pension history. obligation. Even though the GASB 68 requirement to record the unfunded liability in the financial statements is not scheduled until FY 2014-15, we are allowed to early-adopt changes to the Required Supplementary Information and present the expand the reporting time period for the attached Schedule of Funding Progress to 10 years. Based on the Grand Jury's recommendation, we will implement this change for the FY 2013-14 CAFR rather than waiting until FY 2014-15. Both the Pension Trust CAFR and the annual actuarial valuation reports referenced by the Grand Jury also had this data in the form of a Schedule of Funding Progress going back to 2001. In addition, all CAFR's have a portion referred to as the "Statistical Section." GASB and GFOA give government agencies some flexibility in what they choose to report in the Statistical Section beyond some basic requirements. Based on the Grand Jury's recommendation, we will include the 30 year annual actuarial projection (Attachment 1) in the Statistical Section of the CAFR starting with the fiscal year ending June 30, 2014. The 30 year projected performance along with the 10 years of historical data in the Required Supplementary Information (Attachment 2) will provide 40 years of pension information in one document, the County's CAFR. Grand Jury
F2 Page 1
"The County has a 30-year plan to fully fund the pension liability. It is unclear where the county currently stands in this planned recovery." Auditor-Controller-Treasurer-Tax Collector Response: I partially agree. Even though the information is available I can understand it may be difficult to locate. The County fully funds the Annually Required Contribution (ARC) which is computed independently by the Plan's actuary on an annual basis. The ARC is an amount that, if paid on an ongoing basis, would be expected to provide sufficient resources to fund both the normal cost for each year and reducing the unfunded liability. By fully funding the ARC, the County is on track with its 30-year plan to fund the pension liability. The ARC is funded by a combination of employer and employee contributions. . As of the start of 2014, there are 26 years remaining in this 30 year UAAL amortization period. The actuarial report is compiled annually and if needed, recommends adjusting contribution rates to meet the County's retirement obligations. The 2013 Actuarial Valuation included a 30 year projection of the funding of the pension obligations that was referenced by the Grand Jury. The accompanying Attachment 1 to this memo provides an update on this 30 year projection based on the 2014 Actuarial Valuation. Grand Jury
Related Recommendations (1)
R2
Page 1
"A balance sheet report should be provided showing the year to date changes in the actuarial assets and liabilities to assist in tracking the progress of the plan." Auditor-Controller-Treasurer-Tax Collector Response: I partially agree with the recommendation. There is already a schedule in the County's CAFR that accomplishes this but it only presents three years of data. Expanding this report to include 10 years of historical data along with the other changes identified in the response to

* This report's PDF did not contain easily extractable text and required Optical Character Recognition (OCR) for analysis. There may be minor errors in the extracted findings and recommendations due to OCR limitations with scanned documents.