Associated Students Inc. is considering whether it must provide retiree health benefits to future employees.
ASI has about 12 retired employees, spending $62,580 on their medical benefits for 2010-11, said Richard Haller, ASI executive director.
To qualify for full retiree medical benefits, an employee must have worked for ASI for 20 years, be at least 50 years old and have spent the last five years working for ASI. There are 60 full-time current ASI employees, 75 percent of them less than 50 years old, Haller said.
In October, ASI passed a resolution to become part of the Voluntary Employees Beneficiary Association (VEBA), as an alternative way to fund future retirees’ medical benefits. This works by ASI allocating funds to the VEBA trust so that the trust may self-fund benefits through the interest it generates in 20 years.
Now Haller is researching whether ASI is required to provide retiree health benefits to future employees.
Previously, ASI was required by Financial Accounting Standards to disclose the cost of future retiree medical benefits, which showed ASI’s balance sheet to have a $5.8 million noncurrent liability and negative net assets of almost $2 million. However, that was before ASI decided to become a part of VEBA.
Now, Haller has recently met with CSU vice presidents to discuss a loophole.
“There is a section of the education code that provides an out for auxiliary organizations that are funded by student fees,” Haller said. “I don’t know if any [student governments] in the CSU system don’t provide them [medical benefits]. In my understanding, most of them do — if not, all of them.”
Haller said he looked for a trend in health benefits within other CSU auxiliary organizations. However, he said there is no “one set direction.”
Forty-Niner Shops Inc., another CSULB auxiliary organization, has decided not to provide retiree medical benefits for new employees.
Haller said, “It’s an issue facing all auxiliary organizations, not just us.”
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