... Lot At Stake!
😎 Here's an excerpt from the SECU CPA audited financial statements [full audit here]. Sorry, they are for 2022, but can't find the 2023 report on that new website. But, you'll still get the basic idea. Long term active employees and retirees should pay attention and ask for full disclosure. There is a lot of money at stake!
✅ STATE EMPLOYEES’ CREDIT UNION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022 NOTE 13 - EMPLOYEE BENEFITS (page 43)
❋ The Credit Union recognizes post retirement benefit expenses and liabilities on the accrual rather than cash basis. Qualifying SECU retirees are eligible for a fixed allowance toward medical insurance based on a years-of-service, age-at-retirement formula. The Credit Union has invested
monies to fully fund a reserve to meet the estimated obligation for these future post retirement payments.
❋At June 30, 2022, the balance of the post retirement benefit reserve was $156,044,867. [1]
❋ Plan assets in excess of benefit obligations included in other assets $18,672,889. [2]
❋ The discount rate, expected rate of return on plan assets and health care cost trend rate are assumptions which significantly affect post retirement accounting. [3] Relatively small changes in these rates can substantially change the recorded post retirement expense and accrued liability.
Management believes the discount rate, expected rate of return on plan assets and health care cost trend rate used in determining the year-end post retirement amounts are reasonable based on currently available information.
❋ Assumptions used to determine benefit obligations :
❋❋ Assumed health care cost trend rate: [4]
Initial rate ⬆ +8.00% ❋
Ultimate rate ⬆ +5.00% ❋
Year ultimate rate reached 2030 ❋
😎 For those of you who never really cared for accounting here's the skinny: [1] there is a pool of $150+ million at stake, [2] there is an excess of $18+ million in the pool, [3] the SECU executive leadership team believes its forecast of future rates and costs are reasonable, [4] the SECU ELT believes that health care costs will increase between ⬆ + 5% and ⬆+ 8% each year over the next 5 years - to 2030.
😎 ... that would also imply that the SECU is already fully funding the cost of those "ELT" estimates of rising annual (⬆ +5% to ⬆ +8%!) future healthcare costs for retirees.
😎 How does ⬇ capping "their" future costs now, help current long-term and retired employees?
... as they say trust, but verify - there is a lot at stake.
