|March 07, 2006
SAN FRANCISCO & SACRAMENTO, Calif.--(BUSINESS WIRE)--March 7, 2006--
New Relationship Will Be First in Nation to Allow Higher Education Institutions to Comply with New Retiree Health Benefit Accounting Standards
The Community College League of California (CCLC) and Union Bank of California have established an institutional trust relationship that will allow community college districts across the state to meet new retiree health benefit accounting standards mandated by the Governmental Accounting Standards Board (GASB).
Under the new GASB 45 standards, community colleges and public agencies nationwide are required to determine the cost of providing health care benefits for current and future retirees, report progress toward financing these costs and record the unfunded liability, if any, on their balance sheets.
"For California's community colleges alone, that amounts to approximately $2.5 billion in current unfunded liabilities over the next 30 years," said Steve Kinsella, president of Gavilan College and chair of the Joint Powers Agency (JPA), which the Community College League established in 2005 to help districts comply with the new standards. "We need to ensure that our community colleges are equipped to meet the new accounting standards and to secure health care benefits for current and future retirees."
According to Kinsella, the JPA is the only higher education entity of its kind in the United States established expressly for the purpose of facilitating GASB 45 compliance. The JPA provides its members an approved list of actuaries they can work with to determine their financial obligation to meet their future retiree health benefit liability. Working with the JPA, Union Bank will serve as directed trustee for an investment trust that will allow districts to contribute funds to fulfill these obligations.
Union Bank of California was selected as trustee after an extensive search process led by the JPA's Investment Committee and Invest by Design, a San Francisco financial consulting firm. The bank's institutional services and asset management division, which will provide trust services on behalf of the League, has provided trust, custody and investment management services to municipalities and other public entities nationally for more than 85 years.
"The new trust and associated investment options will allow colleges and districts to establish diversified, long-term portfolios to meet projected needs," said Union Bank Executive Vice President Piet Westerbeek. He explained that, in the past, most districts were limited by law to invest retiree health benefits in short-term, fixed-income securities. "This is an innovative approach to help California's community colleges plan for the future."
Kinsella commented, "Union Bank's staff has the experience we need to handle the complex issues involved with government compliance and multi-employer trusts. We look forward to working with them to serve our 109 California community colleges."
The Community College League of California is a statewide association of 72 community college districts and 109 public, two-year colleges in California. The League serves community colleges and districts in six areas: education programs, research and policy analysis, fiscal services programs, governmental relations, communications and governance of athletics.
Union Bank provides comprehensive in-house services for custody, securities lending, corporate trust, retirement plan and investment management services with all client account operations based on the West Coast. Union Bank currently serves clients globally and administers more than $209 billion in trust and custody assets.
Based in San Francisco, UnionBanCal Corporation (NYSE:UB) is a bank holding company with assets of $49.4 billion at December 31, 2005. Its primary subsidiary, Union Bank of California, N.A., had 315 banking offices in California, three in Washington and one in Oregon at December 31, 2005. The company's Web site is located at www.uboc.com.