Timing of the valuation

GASB 75 requires full actuarial valuations once every two years and updated disclosures annually. For years between full actuarial valuations, a streamlined roll-forward valuation can be used assuming there are no significant changes to the District’s retiree health plan that trigger another full actuarial valuation. The benefits of a roll-forward valuation are that it is typically faster, less costly, and that the actuary does not need to collect new census and premium rate information from the District. We have included an exhibit that outlines when a full actuarial valuation is necessary and when a streamlined roll-forward valuation can be used.

Another important concept under GASB 75 is the relationship between the actuarial measurement date and your fiscal year-end. The measurement date can be the same as the fiscal year-end or 12 months prior to the fiscal year end (it can also in-between those two dates, but this is an uncommon approach). Since most public agencies have already adopted GASB 75, the relationship between the measurement date and the fiscal year-end has typically already been established.

Over the last few years, we have found that many districts have waited until the last minute to request an actuarial valuation. One popular strategy is to wait until the auditors are on-site and notify the district that a new valuation is required. This increases the stress level for all parties involved, and increases the chances that your district will be found out of compliance. We continue to recommend that you start the valuation process well before the fiscal year-end for which the auditors will require the new report. Most actuaries will reach out in advance of the fiscal year-end, and we would recommend starting the process no later than the April or May prior to the fiscal year-end. Starting early ensures your actuary can determine well in advance whether a full actuarial valuation is necessary and what information is needed from the District.

Choice of Actuarial Firm

The SISC GASB 45 Trust is committed to flexibility in choice of actuarial assumptions and methods, as well as in your choice of an actuarial service provider. For those districts who have not yet selected an actuarial firm, or for whatever reason are considering changing firms, SISC recommends Total Compensation Systems, Inc. (TCS). TCS has provided thousands of GASB 75 actuarial valuations to California school districts. TCS has user-friendly actuarial reports and very competitive fees. They also offer unlimited support by phone or email without additional fees and are happy to speak directly with your auditors if questions come up to make your life easier.

What to expect during the valuation process

Once you’ve made the decision to move forward with your GASB 75 valuation and selected the actuarial firm to perform the valuation, the next steps are as follows:

Establish a timeline: Standard turnaround time will vary from one actuarial firm to the next, but it will generally range from one to two months from the time the actuary receives all necessary data until receipt of the valuation. Faster turnaround may be available upon request. As a minimum, you should allow three weeks from the time the data is provided to the delivery of the draft actuarial report.

Data request: This is often the most time-consuming part of the valuation process. Your actuary will typically provide you with a description of the data they require. Providing the actuarial firm with complete and accurate data is critical to the quality of the measurements shown in the actuary’s final report. Keep in mind that the census data you provide to your actuary should be as of the GASB 75 Valuation Date. You should ask your actuary if you have any questions about the data you have been asked to provide.

Follow-up questions on the data: In many cases (no matter how complete your data package is) the actuary will most likely need to contact the employer with at least a few questions. You’ll need to have a responsible, reliable contact person available to answer the actuary’s questions about the data. Most questions can be answered at a level below that of Assistant Superintendent; however, certain questions regarding district policy and interpretations of collective bargaining language may require brief involvement of a senior district official.

Draft actuarial report: This is a first report for your review. At this point you want to make sure there are no obvious errors in the data summary, stated plan provisions, or actuarial assumptions that appear at odds with your agency’s situation. You should be comfortable with your actuary and expect him or her to be receptive and willing to answer questions or concerns and address any inaccuracies during this review process.

Final report & Board presentation: You may feel confident enough to present the report to the Board yourself. Or in complex or unusual situations you may want to introduce the actuary to the Board and have the actuary make the presentation. Either way, the job isn’t finished until everyone is comfortable with the valuation report.