The subject of Unfunded Accrued Liability (UAL) – the gap between promised retiree benefits and what money will be available to pay – came out of the blue at last night’s meeting of the Lincoln Parish School Board (LPSB), as Allen, Green & Williamson’s Amy Tynes presented the district’s annual financial report.
Tynes said that per new requirements of the Governmental Accounting Standards Board (GASB), the audit must include an accounting of what is actually owed.
Said Tynes, “The GASB standards changed, and said OK, even though you offer these benefits to employees when they retire, we want to see what benefit in dollars are you actually offering.”
Tynes said the deficit in the group health fund, which is used to pay health benefits to present and future retirees, would grow to $121 million, if present trends continue. Also, she said, the funds that pay retirement benefits could be facing a similar situation, and that unfunded amount could be another $100 million or more.
“If it ever got to this point of the school system having to close their books, if you take your investments and you take all your buildings, and you sell them off, you’re not going to have enough money to cover all these promises, so to speak, that you’ve made to your employees in the school system,” Tynes said.
Tynes said this issue was facing many governmental agencies. However, she said, the accounting standards change help quantify the magnitude of the monetary shortfall, so that solutions can be explored.
See here the audit notes pertaining to the issue.
Several cities have gone bankrupt, partly because of generous retiree health and pension benefits. Detroit, MI, is but one the more infamous examples.
During the Building & Grounds Committee meeting, architect Mike Walpole reported on the ongoing projects throughout the district. He reported that almost all were on time and on budget.
Superintendent Danny Bell reviewed the five year capital expenditure plan for the district. He noted that while all the interested parties had input, the plan is subject to modification as circumstances dictate. The expenditures highlighted in yellow represent projects that are funded by recurring taxes, and those in green are for the Ruston District, funded by a bond issue passed a couple of years ago.
See here the plan.
January sales taxes collections were above projections, and Business Manager George Murphy said that year-to-date, collections were about $2 million (24%) above the same period last year.
See here the report.
Finally, several change orders for the construction projects were approved.
See here the memos.