1. OPEB 101 & Next Steps in Retirement Report David S. T. Matkin, PhD Assistant Professor of Public Administration Florida State University Research Fellow, LeRoy Collins Institute LeRoy Collins Institute Board Meeting September 12 th, 2012

2. Overview Reports in Print/Press – Trouble Ahead: Florida Local Governments and Retirement Obligations (February 2011) – Report Card: Florida Municipal Pension Plans (November 2011) – Years in the Making: Florida’s Under-Funded Municipal Pension Plans (September 2012) Retirement Topics in Development – OPEB 101 – Investment Returns – Benefit Levels

3. OPEB 101

4. OPEB 101 Outline What is it? – Retirement Obligations (Healthcare Insurance Subsidies) – New Accounting Standard (Nos. 43 & 45) – Implicit & Explicit Benefits Where do we stand? – Size of liabilities – Funding status – Size of annual contributions – Relationship to general debt What should be done? – Board Recommendations?

5. Size of the OPEB Liability

6. Franklin County Hollywood Miami Police Sanford

7. Size of the OPEB Liability

8. Funding the OPEB Liability Fund the Liability – Explicit Benefits (n=67) Pay-as-you-go = 45 Prefund (Non-GAAP qualified) = 4 Prefund (GAAP qualified) = 18 – Percent Funded (median) = 12% – Implicit Benefits (n=83) Pay-as-you-go = 76 Prefund (Non-GAAP qualified) = 2 Prefund (GAAP qualified) = 5 – Percent Funded (median) = 30%

9. Size of the Annual Required Contribution

10. Miami Police Franklin County

11. Size of the Annual Required Contribution

12. Funding the ARC

13. Relationship to Other Long-term Debts

14. Relationship to Other Long-term Debt

15. Previous OPEB Recommendations Trouble Ahead Report: 1. Among other options, Florida lawmakers should give much consideration to repealing current Florida law requiring the implicit subsidization of healthcare benefits for Florida local governmental retirees. 2. State oversight by a relevant state agency should be provided in statute to manage local retiree health benefit obligations. This agency should establish standards and provide technical assistance, if desired, to local government staff and local officials.

16. INVESTMENT RETURNS

17. Actual Returns

18. Allocation in Equities

19. Actual Returns Over Time

20. Actual Return - Return Assumption

21. BENEFIT LEVELS

22. Average Benefits Per Retiree

24. Years of Benefits on Hand

25. Funding LevelObs.Years on Hand Less than 60%4610.3 60 to 70 %8113.3 70 to 80 %7314.9 80 to 90 %6516.8 Greater than 90%6120.8 Total32615.6

26. Discussion and Questions