2016_SUNY_Optometry_PRR

2 0 1 5 A N N U A L F I N A N C I A L R E P O R T

Notes to Financial Statements June 30, 2015 and 2014

8. Retirement Plans (continued)

2015 2013 Annual OPEB cost $ 926,232 718,598 715,910 Benefits paid (263,780) (252,084) (243,446) Increase in OPEB obligation 662,452 466,514 472,464 Net obligation at beginning of year 4,017,933 3,551,419 3,078,955 Net obligation at end of year $ 4,680,385 4,017,933 3,551,419 Funded Status: Actuarial accrued liability (AAL) 14,427,276 13,932,707 13,932,707 Actuarial value of OPEB plan assets Unfunded AAL (UAAL) $14,427,276 13,932,707 13,932,707 Actuarial valuation date 4/1/14 4/1/12 4/1/12 Funded ratio Covered payroll $ 3,336,622 3,201,732 3,200,930 UAAL as a % of covered payroll 432% 435% 435% - - - - - - 2014

reports can be obtained by requesting them from their respective corporate offices. The Research Foundation maintains a separate non-contributory plan through TIAA-CREF for substantially all nonstudent employees. Contributions are based on a percentage of earnings and range from 8 percent to 15 percent, depending on date of hire. Employees become fully vested after completing one year of service. Contributions are allocated to individual employee accounts. The payroll for Research Foundation employees covered by TIAA-CREF for its fiscal years ended June 30, 2015 and 2014 was $362 million and $359 million, respectively. The Research Foundation pension contributions were $30 million for both fiscal years. These contributions are equal to 100 percent of the required contributions for each year. Postemployment and Post-retirement Benefits The State, on behalf of the State University, provides health insurance coverage for eligible retired State University employees and their survivors as part of the New York State Health Insurance Plan (NYSHIP). NYSHIP offers comprehensive benefits through various providers consisting of hospital, medical, mental health, substance abuse and prescription drug programs. The State administers NYSHIP and has the authority to establish and amend the benefit provisions offered. NYSHIP is considered an agent multiple-employer defined benefit plan, is not a separate entity or trust, and does not issue stand-alone financial statements. The State University, as a participant in the plan, recognizes these other postemployment benefit (OPEB) expenses on an accrual basis. Employee and retiree contribution rates for NYSHIP are established by the State and are generally 12 percent, and range from 12 to 16 percent for enrollee coverage. The dependent coverage rate is 27 percent and ranges from 27 to 31 percent. NYSHIP premiums are being financed on a pay-as-you-go basis. During the fiscal year, the State, on behalf of the State University, paid health insurance premiums of $263.8 million. The State University’s OPEB obligation and funded status of the plan for the years ended June 30, 2015, 2014, and 2013 were as follows (in thousands):

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The components of the State University’s OPEB obligation include the total ARC of $940.6 million, ARC reduction of $141.2 million, and interest costs of $126.8 million. The initial unfunded accrued actuarial liability is being amortized over an open period of thirty years using the level percentage of projected payroll amortization method. The actuarial valuation utilizes a frozen entry age actuarial cost method. The actuarial assumptions include a 3.2 percent discount rate, payroll growth rate of 3.0 percent, and an annual healthcare cost trend rate for medical coverage of 8.25 percent initially, reduced by decrements to a rate of 4.75 percent after 7 years. Projections of benefits are based on the plan and include the types of benefits provided at the time of each valuation. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of future events, and actual results are considered for future valuations. The actuarial methods and assumptions used are designed to reduce short-term volatility in reported amounts and reflect a long-term perspective.