Institutional Federal Compliance Report 2021

Employees covered by benefit terms, as of the June 30, 2017 actuarial valuation date: ____________________________________________________________________________________________ STATE OF NEW YORK • 123 Health Care Participants Active Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,915 Inactive participants entitled to but not yet receiving benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,025 Retirees and surviving spouses receiving benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,013 Total Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,953

Actuarial Methods and Assumptions CUNY recognized a total OPEB liability of $1.7 billion for the fiscal year ended June 30, 2018. The total OPEB liability was measured as of June 30, 2018 using an actuarial valuation as of June 30, 2017 rolled forward to a total OPEB liability as of June 30, 2018. The total OPEB liability was calculated using the Entry Age Normal, level percent of pay cost method. The actuarial valuations included the following actuarial assumptions:

The salary increase rates vary by age and gender. The salary increase rates for males range from 10.91 percent to 2.38 percent for ages 25 to 75, respectively. The salary increase rates for females range from 10.35 percent to 3.08 percent for ages 25 to 75, respectively. Health care trend rates were split into three cate- gories: pre-Medicare plans rates trended from 7.5 percent to 5.0 percent from 2018 to 2023 and beyond; medical post-Medicare used a health care trend rate of 5.0 percent; and welfare fund contributions used a health care trend rate of 5.0 percent. For the June 30, 2017 valuation, Health Insurance Plan (HIP) and other HMO pre-Medicare trend assumed to be 7.61 percent based on health care savings agreement initiatives. Mortality rates used in the CUNY valuation assume different pre-retirement and post-retirement mortality. Pre-retirement and post-retirement mortality rates are based on the experience under the NYSTRS. In order to reflect future mortality improvement, the mortality is projected generationally using the Society of Actuaries scale MP-2014. CUNY’s changes in the total OPEB liability as of June 30, 2018 were as follows (amounts in millions):

Assumptions

June 30, 2018

Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discount Rate . . . . . . . . . . . . . . . . . . . . . . . . Consumer Price Index used for the excise tax on high-cost employer health plans . . . . . . . . . . . . . . . . . . . . . . .

2.50% 2.98%

2.25%

The discount rate used to measure liabilities was updated to reflect the S&P Municipal Bond 20-Year High Grade Index yield of 2.98 percent as of June 29, 2018 as reported by the New York City Office of Actuary.

Total OPEB Liability, Beginning Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Difference between expected and actual experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Changes in assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Benefit payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Net changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Total OPEB Liability, Ending Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

1,506 107

50

(4)

40

(32)

161

1,667

Changes in assumptions and other inputs reflect the effects of changes in the discount rate each period. The discount rate used to determine the June 30, 2017 total OPEB liability was 3.13 percent. The dis- count rate used to determine the June 30, 2018 total OPEB liability was 2.98 percent.

Sensitivity of total OPEB liability to changes in discount rate. The following presents the total OPEB liability of CUNY as of June 30, 2018 using the current year’s discount rate, as well as what the total OPEB liability would be if it were calculated using rates that are 1 percentage point higher and 1 percentage point lower than the current year’s rate (amounts in millions): 1% Current 1% Decrease Rate Increase (1.98%) (2.98%) (3.98%)

Total OPEB Liability as of June 30, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

1,977 $

1,667 $

1,423