Sarasota County Schools
Agenda Item #30
Title
APPROVAL OF CONTRACT WITH AON CONSULTING FOR AN ACTUARIAL STUDY
Description
The School Board of Sarasota County needs an actuarial study in order to comply with Governmental Accounting Standards Board (GASB) Pronouncements 43 and 45. GASB Pronouncement 43 is entitled "Financial Reporting for Benefit Plans Other Than Pension Plans" and is effective for fiscal years beginning after December 15, 2005, which is fiscal year 2006-07. Even though the school district retirees pay for their benefits (i.e. health insurance, life insurance, dental insurance, and vision care) after retirement, GASB 43 requires that an actuarial study be performed to find out the estimated cost of that benefit during the employee's working career. Florida Statutes prohibit the charging of retirees for their share of the benefits in excess of what regular employees are charged. This means that the school district would have to analyze its health insurance experience using two categories (employee or retiree) and then use an actuarial study to determine the cost of the retiree benefit over the working career of the retiree. This has to be determined in 2006-07. In 2007-08, GASB 45 takes effect by setting up the accrual of the potential cost of this "benefit" as a liability on the financial of the school district each year. GASB 45 is entitled "Accounting and Financial Reporting by Employer for Benefits Other Than Pensions." By far, the major impact will be the liability for health insurance and Aon Consulting has been the analyst of the school district's health insurance program and has a data base of information from the health insurance carrier. This contract will cost $18,000, and will place the school district over the $25,000 plateau for contracted services with Aon Consulting. An actuarial study will be required every two years after the initial study and there is no commitment to Aon Consulting for future actuarial studies. A good summary of GASB 43 and 45 can be found at www.hoguejr.com/gasb.htm.
Recommendation
That the actuarial contract with Aon Consulting in the amount of $18,000, be approved as presented.
Contact
LEMPE & MONSON
Financial Impact
$18,000
Attachment: Aon Contract.pdf