Unfunded Liability -- Retiree Health

Unfunded Liability Definition -- The amount, at any given time, by which future payment obligations exceed the present value of funds available to pay them. In the Rocky Mountain Conference, we currently have an Unfunded Liability for Retiree Health Benefits. 

The table to the left is a statement of the unfunded liability for retiree health care.  (Clicking on it will make the resolution larger.) The source is the 

Comprehensive Benefit Funding Plan  (and that is linked to the PDF on the RMC Website.)  

This table says we have a current obligation of $8,143,183 with assets on hand of $3,767,431. That translates to a liability of $4,375,752. 

The above table says that at the current cost of sustaining this fund (Line 4 on the Table) plus the number found by dividing the $4,375,752 (the Unfunded Liability on Line 5) by 20 gets us to a 20 year liability liquidation (Line 7 on the Table).  Line 8 is the "annual cost" to make this unfunded liability by 2038.

  

Said another way:  the year 2038 represents the 20 year liquidation strategy with the cost of Wespath (formerly the General Board for Pension and Health Benefits) managing these investments staying constant.

Right now, this annual cost obligation for retiree health care Unfunded Liability is being met by payment into this account from rebates on health care premiums paid by local churches on active clergy.  These rebates occurred in 2012, 2014, and 2016 and in addition, $400,000 or so was transferred from excess collections for active health payments for 2012, 2013 and 2014.

Our responsibilities here were reviewed significantly in 2008 at Annual Conference in Grand Junction.  We significantly altered who was eligible for coverage and the amount of service time required in order to receive the coverage.  The changes in 2008, combined with other Federal changes since 2008 in the area of Health Care, eventually led to a reduction on retiree health obligations from the active budget of over $300,000.
  

At that time, the Chair of the Conference Board of Pension and Health Benefits was the Reverend Dave Lillie.  It was Lillie's position that because we were annually re-approving the retiree liability by virtue of the approval of the retiree health care petition we could change the obligation (liability) by calling the matter to the attention of the RMC and voting changes if the conference desired.

Lillie’s point was that the liability would be understood to be contingent upon continued annual approval. The conference could alter or reduce the liability with a vote after explaining the implications. The last several petitions on Retiree Health Care contained that explicit caveat.  

Please note that the unfunded liability for retiree health because of the use over the last four of (1) over billing on the health premium and (2) the rebate on active health payments, is being met by those churches that have full-time clergy (because they are the ones paying health benefits.)  I intend to cover this issue later as well.  

This particular blog is intended to be an explanation of history and facts regarding this program.  The next blog will deal with my problems with what we are doing.  

Selah, Dennis

This is temporarily the end.  More work to do.  Keep watching on FaceBook or Twitter or post your email (above) and get updates.