In Speaking Out on April 2, Dr. Peter Knutson of the accounting faculty challenged one of the answers in a Q&A by Human Resources on March 26. HR Vice President Clint Richardson has sent the following response.

FAS 106 and Dr. Knutson

Dr. Knutson's points are well taken, but they do not address the major focus of our question, which was on the timing of the decision to introduce cost sharing. As a matter of fact, the issuance of Financial Accounting Standard No. 106 brought to the attention of senior University administrators substantial growth in the Uni-versity's liability to provide post-retirement medical benefits to its employees. It was in 1993, not recently, that the decision was made to keep benefits at the same level but with cost sharing.

Another matter, of which employees may not be aware, is that the University is in the process of funding its post-retirement medical liabilities. This means the money to pay future medical benefits is being put aside in a trust fund over a 20-year period. Therefore, University employees have the assurance of knowing that the University (unlike most for-profit enterprises) will have the money to pay those benefits when they come due.

Faculty and staff with questions or needing additional information regarding retiree medical benefits or other benefits questions, should contact the Benefits Office of Human Resources at 898-7282 or e-mail askhr@pobox.upenn.edu.


Volume 42 Number 28
April 16, 1996

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