University of Oregon 2019 Annual Financial Report
Notes to the Financial Statements
For the Year Ended June 30, 2019 (dollars in thousands)
an "implicit rate subsidy." The UO's proportionate
share of activity based on percentage of annual health
insurance premium costs was $613 calculated at 8.15
percent of the total for the state.
Retirement Health Insurance Account (RHIA) is a cost-
sharing multiple-employer defined benefit OPEB plan.
Established by ORS 238.420, the plan provides a payment
of up to $60 toward the monthly cost of health insurance
for eligible PERS members. The plan was closed to new
entrants hired on or after August 29, 2003. To be eligible
to receive this monthly payment toward the premium
cost the member must: (1) have eight years or more of
qualifying service in PERS at the time of retirement or
receive a disability allowance as if the member had eight
years or more of creditable service in PERS, (2) receive
both Medicare Parts A and B coverage, and (3) enroll in
a PERS-sponsored health plan. This multiple-employer
cost-sharing defined benefit OPEB plan is administered
through a trust. Contributions are actuarially determined
as a percentage of payroll. The amounts presented in
this note are limited to the UO's proportionate share
of activity based on percentage of total contributions,
estimated at 2.20 percent of the total. The UO's FY19
RHIA contributions were $1,026.
Retiree Health Insurance Premium Account (RHIPA)
is considered a cost-sharing multiple-employer defined
benefit OPEB plan. Established by ORS 238.415, the plan
provides payment of the average difference between
the health insurance premiums paid by retired state
employees and premiums paid by state employees who
are not retired. To be eligible to receive this monthly
payment toward the premium cost the member must: (1)
have eight years or more of qualifying service in PERS at
the time of retirement, or (2) receive a disability pension
calculated as if they had eight years of qualifying service
but are not eligible for federal Medicare coverage. The
plan was closed to new entrants hired on or after August
29, 2003. This single-employer defined benefit OPEB
plan is administered through a trust. Contributions are
actuarially determined as a percentage of payroll. The
amounts presented in this note are limited to the UO's
proportionate share of activity based on percentage of
total contributions, estimated at 6.25 percent of the total.
The UO's FY19 RHIPA Contributions were $934.
OPEB Plans Report
The PERS RHIA and RHIPA defined benefit
OPEB plans are reported separately under Other
Employee Benefit Trust Funds in the fiduciary funds
combining statements and as part of the Pension
and Other Employee Benefit Trust in the state's
comprehensive annual financial report. PERS issues
a separate, publicly available financial report that
includes audited financial statements and required
supplementary information. The report may be
accessed online at: www.oregon.gov/pers/Pages/
Financials/Actuarial-Financial-Information.aspx
PEBB does not issue a separate, publicly available
financial report.
OPEB Liabilities, OPEB Expense, Deferred Out-
flows of Resources, Deferred Inflows of Resources
Projections of benefits are based on the substantive
plan (the plan as understood by the employer and
plan members) and include the types of benefits in
force at the valuation date and the pattern of sharing
benefit costs between the UO and the plan members
to that point. Actuarial calculations reflect a long-term
perspective and employ methods and assumptions that
are designed to reduce short-term volatility in actuarial
accrued liabilities and the actuarial value of assets.
Significant methods and assumptions were as follows:
Actuarial Valuation Date
Measurement Date
Actuarial Cost Method
Inflation Rate
Investment Rate of Return
Projected Salary Increases
Discount Rate
RHIA
12/31/2016
6/30/2018
Entry Age Normal
2.50%
7.20%
3.50%
PEBB
7/1/2017
6/30/2019
RHIPA
12/31/2016
6/30/2018
Entry Age Normal
2.50%
Entry Age Normal
2.50%
7.20%
3.50%
3.50%
3.50%
The discount rate used to measure the total RHIA/
RHIPA liability was 7.20 percent. The PERS Board
reviews the discount rate in odd-numbered years. The
projection of cash flows used to determine the discount
rate assumed that contributions from plan members
and those of the contributing employers are made at the
contractually required rates, as actuarially determined.
Based on those assumptions, the RHIA/RHIPA plan's
fiduciary net position was projected to be available to
make all projected future benefit payments of current
plan members. Therefore, the long-term expected rate of
return on OPEB plan investments for the RHIA/RHIPA
plan was applied to all periods of projected benefit
payments to determine the total OPEB liability.
Under GASB 75, PEBB unfunded plans must use
a discount rate that reflects a 20-year tax-exempt
municipal bond yield or index rate. The assumptions
in this report reflect the Bond Buyer 20-Year General
Obligation Bond Index. The discount rate in effect
for the June 30, 2018 reporting date is 3.87%, and the
discount rate in effect for the June 30, 2019 reporting
date is 3.50%.
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