Agenda Item 10
Robert H. Drummer, Senior Legislative Attorney
Expedited Bill 17-11, Personnel - Other Post Employment
Benefits Trust - County - funded Agency
Expedited Bill 17-11, Personnel - Other Post Employment Benefits Trust - County
funded Agency, sponsored by Council President Ervin, Councilmembers Navarro, Floreen,
Andrews, Riemer, Rice, Leventhal, EIrich, and Council Vice President Berliner was introduced
on May 26, 2011. A Government Operations and Fiscal Policy Committee worksession is
tentatively scheduled for June 27 at 9:30 a.m.
Bill 17-11 would amend the Retiree Health Benefits Trust (RHB) to provide a funding
mechanism to pay for other post employment benefits (OPEB) for employees of Montgomery
County Public Schools (MCPS) and Montgomery College (College). The Council President
described the purpose of the Bill at ©16-17.
The RHB was established by Bill 28-07, enacted on April 1,2008, to secure funding for
all or a portion of certain County benefit plans providing retiree health and life insurance
benefits. The RHB resulted from the implementation of Government Accounting Standards
Board (GASB) Statement 45,
Accounting and Financial Reporting by Employers for Post
employment Benefits Other than Pensions.
Prior to the issuance of Statement No. 45 by GASB
(GASB 45), government financial statements reported the effect of these other retiree benefits
when they were paid. Since these retiree benefits are consideration for employee services
rendered, GASB 45 directs state and local governments to recognize the cost of these benefits
when the related employee services are received instead of when they are paid. GASB 45
became effective for jurisdictions with more than $100 million in revenue in FY08.
GASB 45 does not require funding the accrued expense, but credit rating agencies expect
state and local governments to do so. The Council adopted Resolution 16-87 on April 10, 2007,
committing to fund the difference between the Other Post Employment Benefits (OPEB) pay-as
you-go contributions and the annual required contribution on an amortized even basis over a
five-year period beginning in FY08. The Council appropriated $31.9 million in FY08 for the
RHB. However, due to growing fiscal pressures in FY09, the Council changed the phase-in