The Board of Directors of the Municipal Water District of Orange County (MWDOC) has taken action to fully fund the liability for retiree health care benefits. Known as OPEB (Other Post-Employment Benefits), the Board implemented the funding recommendations of an actuarial report presented Wednesday to Directors of the wholesale water agency.
The report by Demsey, Filliger & Associates found that recent contributions to the OPEB irrevocable trust brought the funding level to 89 percent of the projected liabilities and recommended that no additional contributions be made at this time. Instead of overfunding the trust MWDOC has elected to establish a reserve fund for the remainder of the OPEB liability. In future years, MWDOC will maintain the trust fund at an 80% to 90% funded level with the balance maintained in the reserve. The total liability will change over time and overpayment into the trust is undesirable as excess contributions would be encumbered for decades and could not be withdrawn until all benefit obligations are satisfied. The MWDOC Board previously authorized a $400,000 payment to the retirement liability fund.
“Eliminating MWDOC’s unfunded liabilities has been a top priority for the agency” said Board President Wayne Osborne. “This is a rare and highly desirable outcome” he added.
“The proactive funding of these liabilities now, ahead of the required schedule, represents a massive savings to our ratepayers” added Committee Chairman Jeff Thomas. A 2013 estimate of unfunded liabilities for pensions in California is $946.4 billion and in 2014 retiree health benefits for state employees was calculated at $64.6 billion and very few programs are fully funded.
MWDOC is a wholesale agency supplying water to 2.2 million Orange County residents through 28 member agencies. MWDOC provides water reliability to Orange County through imported water, regional water-resource planning, countywide water-efficiency programs and emergency response programs.
This article was released by the Municipal Water District of Orange County.