Institutional Federal Compliance Report 2021

long-term trend rate for all health care benefits after seven years. The trend assumption for post-65 benefits begins at 5.3 percent and decreases to a 4.75 percent long-term trend rate after seven years. The drug ben- efits assumption begins at 10 percent and decreases to a 4.75 percent long-term trend rate after seven years. Additionally, a trend starting at 5 percent per year and decreasing to 4.75 percent after six years was assumed for the Employer Group Waiver Plan (EGWP) benefits. Other actuarial assumptions include a salary growth rate of 3 percent, an inflation rate of 2.5 percent and a discount rate of 2.637 percent that was the average short-term investment pool rate for the past 20 years at the time of the valuation. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the prob- ability of events in the future. Examples include assump- tions about employment, mortality and healthcare cost trends. Actuarial valuations are subject to continual revision as actual results are compared to past expec- tations and new estimates are made about the future. Business-Type Activities The State, on behalf of SUNY, provides health insur- ance coverage for eligible retired SUNY employees and their spouses as part of NYSHIP. Employee con- tribution rates for NYSHIP are established by the State and are generally either 12 percent or 27 percent of the health insurance premium for enrollee coverage, or either 27 percent or 31 percent of the health insur- ance premium for dependent coverage. The frozen entry age actuarial cost method is used to determine the annual required contribution amounts and the annual net OPEB obligation. The actuarial assump- tions include a 2.637 percent discount rate, salary growth rate of 3 percent, an inflation rate of 2.5 percent, and an annual healthcare cost trend rate for medical coverage of 6.75 percent initially, reduced by decrements to a rate of 4.75 percent after 7 years. SUNY’s annual OPEB costs and changes in net OPEB obligations for the year ended June 30, 2017 are as follows (amounts in millions): 118 • Notes to Basic Financial Statements _________________________________________________________________________ Annual required contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Interest on net OPEB obligation at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Adjustment to annual required contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Annual OPEB cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Contributions made . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Increase in OPEB obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net obligation at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net obligation at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Actuarial accrued liability (AAL) April 1, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Funded OPEB plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unfunded actuarial accrued liability (UAAL) April 1, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Funded ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Covered payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ UAAL as percentage of covered payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,220 140 (173) 1,187 (309) 878 5,319 6,197 17,699 —00000 17,699 —0 0 0 % 3,785 467.6%

The SUNY Research Foundation, a blended com- ponent unit of SUNY, is not included in the numbers reported above. The SUNY Research Foundation reports OPEB in accordance with the Accounting Stan- dards Codification (ASC) Topic 715, Compensation— Retirement Benefits . SUNY’s OPEB liability reported in the Statement of Net Position, Enterprise Funds ($6.2

billion), includes SUNY’s net obligation above ($6.2 billion), and the net obligation of the SUNY Research Foundation’s plan as of June 30, 2017 ($23 million). SUNY’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for SUNY’s three most recent fiscal years were as follows (amounts in millions): Percentage Annual of Annual Net OPEB

Fiscal Year Ended

OPEB Cost

OPEB Cost Paid

Obligation

06/30/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 06/30/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 06/30/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

1,187 923 926

26.03% $ 30.77% $ 28.51% $

6,197 5,319 4,680

CUNY retirees receive retiree healthcare benefits through the New York City Health Benefits Program, which is a single-employer defined benefit healthcare plan. The program covers individuals who receive

pensions from one of the following three pension plans within the New York City Retirement System (NYCRS): New York City Employees’ Retirement System; New York City Teachers’ Retirement System;