2014 State Board of Accounts Audited Financial Statement Shows That Evansville Health Care Benefit Liability Is $234,000,000 Dollars

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2014 State Board of Accounts Audited Financial Statement Show That City Retirees Health Care Benefit Liability is $234,000,000 Dollars

(the practice of non-contribution to this fund has been going on for several years or decades)

Attached below is the link of Note #8 of the 2014 State Board of Accounts Audited Financial statement.  This  link shows that the post retired city employees  Employment Health Care Benefit liability as of 2014 is $234,000,000 dollars.  This link points out that the City of Evansville  for a period of many years or decades contributed zero dollars to the post retired city employees Employment Health Care Benefit fund.

NOTE #8. The City of Evansville Retiree Healthcare Plan is a single-employer defined as employee benefit healthcare plan administered by the City of Evansville in an internal service fund. The plan provides health care benefits and life insurance to eligible retirees and their spouses. Indiana Code 5-10-8 assigns the authority to establish and amend benefit provisions to the City.

NOTES TO FINANCIAL STATEMENT SECTION entitled  Funding Status and Funding Progress As of January 1, 2014, states the most recent actuarial valuation date, the plan was 0 percent funded. The actuarial accrued liability for benefits was $234,240,397 and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $234,240,397.

Go to the link attached below and then go to the top of page 19 and you shall read the reference made by the SBOA concerning the City of Evansville Retiree Healthcare Plan.

The following is the website  .. http://www.in.gov/sboa/WebReports/B45886.pdf

FOOTNOTE: This link suggests that the City of Evansville should have put money in the City of Evansville Retiree Healthcare Plan fund in the amount of $234,000,000  but failed to meet the city’s obligations to the Evansville City Retiree Healthcare costs.

We wonder if the City has contributed any money  towards the Evansville Retiree Healthcare fund in 2015 and 2016.  We also would like to know if the Mayor has dedicated funds in the 2017 City budget  towards the Evansville Retiree Healthcare fund.

Bottom line we wonder why past and present city Administrations decided not to contributed any money towards the Evansville Retiree Healthcare fund.  It looks like the practice of non-contribution to this fund has been going on for several years or decades.

Finally, we wonder is the City required by ordinance to contribute to this fund or was this just like a gentlemen  agreement?

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6 COMMENTS

  1. Put this in IIT tomorrow. This scenario is playing out this same way all across the country. Politicians have made promises that can never be kept. The healthcare obligation is the tip of the iceberg. Look at the retirement obligations. They are larger. There is not a snowballs chance in hell that these promises can be kept.

    • I can’t speak for any other pension funds, but Indiana’s Police & Fire PERF is supposedly so well funded that the state reduced the city’s obligation from 21% of salary to 17% over the last few years. Of course none of these savings has been given back to the actual members.

  2. Joe,

    Remember when Chris Christi took office as Gov of New Jersey. He plainly said to the state employees, “We do not have the money ..you need to ask the governors before me what they did with your money”

    • You are correct. Kentucky only has about 10% of what is needed on deposit to fund retirement obligations. The fools assume a 6% annual return too. The reality is that they could be facing default in 3 years. Low returns on investment have killed pension fund sustainability.

      • Joe,
        The average investing individual and soon to be retiree should truly understand the effects of a Nation that owes $20 Trillion. Consequently, the Fed Reserve must manipulate the interest rates causing unreasonable drives to the equity markets and unreasonable returns on bond funds (The treasury bonds are up 12% this year) and when hyper- inflation becomes reality, the Fed Reserve will have no choice but to increase interest rates or see capital dissipate before their very eyes. Thus, the great crash which will surpass Oct 29, 1929 and we have no reserve to counter.

  3. You are correct regarding the actual returns are ridiculously low. This is forcing investment advisors to push the envelope on the investment profile, i.e. higher risk in chancing returns. In Regards to the actuarial study that produced the $235,000,000 present value liability, they used 4.50% which is too high as well. The rate of return should had been 3.25% which would increase the present value by $125,000,000. Other cities our size realized present value liabilities between $375 million and $450 million. The horsemen are saddling up!!!

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