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Column: Countering the WCPC claim about pensions

WORTHINGTON -- So, what is the WCPC claim about with regard to pension liability? The Worthington School District 518, along with all other school districts, are now responsible to include pension liabilities as a part of the annual audit due to ...

WORTHINGTON -- So, what is the WCPC claim about with regard to pension liability?

  The Worthington School District 518, along with all other school districts, are now responsible to include pension liabilities as a part of the annual audit due to Governmental Accounting Standards Board (GASB), and it also includes other governmental entities. This new requirement takes the reporting out of the pension’s audit and moves it to governmental entities in which all entities contribute on an annual basis to meet this liability.

  The district’s auditor states this, as follows:

  “The Governmental Accounting Standards Board (GASB) issues a Statement No. 68, Accounting and Financial Reporting for Pensions, and mandated the reporting requirements for audits with fiscal years ended June 30, 2015, and thereafter.  School Districts in cost sharing multiple employer plans (TRA and CERF) now have to report a projected future actuarial liability, but the required contributions are not based on an actuarial calculation of pension benefits earned, but rather on the rates determined by current statutory requirements.  Statement 68 requires school districts to more comprehensively and comparably measure the annual costs of pension benefits,” states Wayne W. Drealan, CPA of Drealan, Kvihaug, Hoefker & Co., P. A.

  Ultimately, DON’T let this tactic confuse you -- go to the district website to get the real answers to your questions. Further information is provided to help you understand this item.

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  Here’s an additional explanation of this item:

  What is GASB? GSAB is an independent, non-profit, non-governmental regulatory body charged with setting authoritative standards of accounting.

  When do the new standards go into effect? GASB Statement 67, which replaces the requirements of Statement No. 25, Financial Reporting for Defined Benefits Pension Plans. GASB Statement 68 replaces the requirements of Statement No. 27 Accounting for Pensions by State and Local Governmental Entities for their 2015 financial statements. GASB 27 is effective for fiscal years beginning after June 15, 2014.

  What’s new in the GASB rules? PERA’s plans are multiple-employer cost sharing plans. Each employer will be required to include proportionate share of the “net pension” proportionate share of each plan’s pension expense, and deferred inflows of resources and deferred outflows of resources will be requirements and required supplementary information schedules in their financials. Finally, employer contributions to PERA will no longer be included in pension reports.

  Will these changes affect the amount of contributions sent to PERA? No, although GASB 58 requires that each employer’s proportionate share of PERA’s net pension liability (unfunded liability) be shown to change contribution rates. The net pension liability is unlike any of the other liabilities reported on an employer’s balance sheet, in the pension liability from their financial statements.

  Will employers have to pay more for pension because of the new standards? No. the new GASB statements do not affect the amount employers will ultimately pay to fund  the pensions. They only change how pension liability is reported.

  The only change is how costs are reported. It is important to note that these new GASB rules apply only to accounting and financial reporting. They do not apply to future liabilities providing pension benefits. The only thing that changes is where and how pension costs are accounted for in audits. (Note: This information can be found on the PERA pension’s website.)

  If you would have further questions regarding this claim, please feel free to contact the district office and we would be happy to explain the change to accounting practices. Remember that we are required to provide factual information.

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RESPONSES TO ADDITIONAL QUESTIONS:

Will my taxes really be 29% higher? No, your taxes will not be 29 percent higher as reported by WCPC.  The district is using a process called “wrap” financing in that it allows for debt to be consolidated and paid as one debt versus having two debt payments.  You basically are resetting the debt of the district at a new yearly payment at a specific level, and the WCPC has left out the current debt to express that your taxes are going up 29 percent more when in reality the district is already collecting and paying this debt. The amount levied from 2018 through 2042 will be approximately $5 million to $5.36 million dollars (this includes Prairie debt and new debt until 2024). After 2024, the payments will be for the new high school and other facilities defined in the ballot question. As you can see, this is not a 29 percent increase, and this can be shown if you access the tax calculator on the district web site to determine the estimated real impact for you.

Is the student capacity for the new high school enough for the future? Based on a great deal of discussion and planning, the district believes that the enrollment needs will be addressed well into the future with an 1,100-student design capacity. Unlike elementary buildings, high school students travel throughout the building from class to class in a given day. Many of these classroom spaces are specialized such as labs, shops and other customized spaces that may typically be used every hour of every day. With that stated, a space utilization factor is established based on scheduled usage of each individual space in a building. Capacity can be altered and varied by implementing different schedules and/or through strategic use of various spaces within the building. In fact, we have implemented such methods within our existing high school just to meet the current needs. The new high school facility would be designed and configured in such a way that future utilization and expansion for increased future enrollment is easily accomplished.

Are we building everything designated on the site map? No. The current intent was to complete a site map that showed future facility needs, but were included as place holders such as a future hockey arena, future pool area, future soccer fields, future baseball fields, future softball fields and so on. The ballot questions is specific to what is included in the project and should be read entirely in order to identify what is included. The intent is to complete all site work shown on the concept diagram except for the south most fields that were labeled “potential fields." It is important to note that the final number, type and configuration of the other grass fields depicted on the concept drawing was in fact a concept. As the design phase progresses after the referendum, the actual field counts, types and locations will be developed. Mass grading and earthwork will be required for development of the new high school and surrounding site. For this reason, development of grass practice type fields as shown may appear to be a large undertaking covering much of the site, but it is actually a very minor element of the overall site work because grading, earthwork and seeding, etc. will be required anyway.

Related Topics: EDUCATION
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