Fowler USD’s Long-term Vision for OPEB Prefunding Brings Success

Categories: California Developments,Hot Sheets,OPEB/GASB 45/75
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A Look Back at An Early-Adopter

Fowler Unified School District is a point of pride for the City of Fowler, a small tight-knit community located about five miles south of Fresno. From state and national award recognitions, to the innovative “Birth to 3rd Grade Reading Challenge”, to the community favorite “Academic Signing Day” for all high school seniors heading off to college, Fowler USD provides an engaging and supportive environment for its students.

To develop and maintain a progressive district requires among other things, prudent long-term vision. Fowler USD leaders demonstrated such vision in 2006 when faced with the GASB 45 pronouncement that liability amounts for other post employment benefits (OPEB) should be actuarially calculated and noted in annual financial statements. While not mandated at that time to take action, Fowler USD realized the importance of developing an OPEB funding plan right away. Through their association with CSBA, the District was introduced to the CSBA PARS GASB 45 Solutions Program.

Fowler USD learned how The GASB 45 Program allows districts to put money earmarked for OPEB expenses safely and securely into a trust which in turn can be diversified through equities to generate a greater rate of return. The Program also enables districts to retain local control over funds, the timing and amounts of contributions, as well as select investment strategies that align with their risk tolerance level.

Not long after initial discussions in late 2006, Fowler USD leaders adopted The GASB 45 Solutions Program, chose a more aggressive investment approach (approximately 60% equities), and in the first year made contributions into the trust nearly three times larger than their actuarially defined ARC.

When the financial downturn hit not long after in 2008, the District remained steadfast, keeping in mind its long range goals, and choosing to leave the money in the trust, with the same investment strategy. This proved to be financially beneficial as the markets turned around and today, despite enduring one of the largest economic downturns in a generation, Fowler USD’s OPEB trust assets have grown to reduce their liabilities by over 50%.

With their vision and discipline to prefund OPEB through the GASB-compliant, IRS-approved CSBA PARS Program, Fowler is in great shape to not only weather GASB 45 currently in effect, but also the new GASB 75 requirements released this year and effective June 2017. Among other things, GASB 75 requires agencies account for and report their total OPEB liabilities on the face of their public financial statements through a trust like the CSBA PARS Program that is 1) Irrevocable, 2) Cannot be accessed by creditors, 3) For the purpose of prefunding OPEB benefits.


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