Germantown trustees briefed on OPEB valuation; $650,000 trust start and tiered benefits cited to cut liability

Germantown School District officials on June 2 reviewed an actuarial valuation of the district’s other post‑employment benefits that shows a significant unfunded liability but also outlines a plan to reduce future exposure.

John Lavarda, a consultant with Foster & Foster, told the personnel committee the district’s GASB Statement No. 75 valuation reported a total OPEB liability of about $9,350,311 as of the 6/30/25 measurement date and trust assets of $650,388, for a net liability of roughly $8.7 million. Lavarda said the district’s recent shift from open, premium‑based retiree insurance toward a three‑tier design that uses fixed HRAs for many future retirees is the primary reason the liability dropped from roughly $12–13 million in prior full valuations.

“Since the plan moved from open premium exposure to tiered HRAs, the long‑term liabilities are more predictable,” Lavarda said. He explained core actuarial terms — total liability, service cost, fiduciary position and the actuarially determined contribution schedule the district can use to amortize the unfunded portion over 5, 10 or 15 years.

District budget staff said they placed $650,000 into a newly created Fund 73 trust last year to begin steady funding. “Prior to the trust we were budgeting retiree costs on a pay‑as‑you‑go basis and the amounts varied year to year,” said Britney, who oversees budget matters. She said the trust and a formal payment schedule will help smooth the annual budget impact of retiree costs.

Dr. Castro and board members stressed the policy goals behind the work: honor promises to long‑serving staff while protecting taxpayers from large future spikes. Board members recalled prior estimates that, under the old benefit design, long‑term unfunded liabilities could grow into the tens of millions of dollars if left unaddressed.

The district will review amortization options from the consultant’s schedule and bring recommendations for an actuarially determined contribution to the finance committee. The valuation and funding plan provide a road map for balancing retiree benefit commitments and fiscal sustainability, district officials said.

What’s next: administration will present funding‑schedule options and timing to the finance committee for adoption and annual budgeting; the full valuation and the consultant report will be distributed to the full board and included in upcoming budget materials.