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Postretirement Benefits--Active Employees
Reserve Calculation
To calculate the postretirement reserve amount for active
employees, Dorn started with the $10,779,650 that he calculated
for retirees. He then divided by the number of current retired
employees (1,163) to get a cost per employee. Dorn once again
consulted with Don by telephone to ask for a factor to determine
the cost for covered active employees. Don told him to divide
the cost per retired employee by 10. Dorn followed Don’s
direction and arrived at $927. He then multiplied $927 by the
number of active employees (not including key employees),
resulting in $16,133,508. This amount was used in calculating
the 1987 contribution.
Medical Benefits for Union Members
Reserve Computation
Petitioner’s benefits department supplied Dorn with the
fiscal 1987 expenses through April 1987 for short-term disability
and medical, dental, and life insurance benefits paid under
collective bargaining agreements. Dorn looked at all of the
collective bargaining agreements in effect and determined the
remaining length of each contract after June 30, 1987. He then
annualized the expense amounts that were given to him by the
benefits department. This amount was then multiplied by the
remaining length of each contract to arrive at $3,210,991.
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Last modified: May 25, 2011