NOTES TO FINANCIAL STATEMENTS
NOTE 11 - BENEFIT PLANS 403(b) Defined Contribution Plan
Assumed health care cost trend rates have a significant effect on the amounts reported. A 1% change in assumed health care cost trend rates would have the following effects as of December 31, 2024: 1% Increase 1% (Decrease) Effect on total of service and interest cost components $ 289,000 $ (220,000) Effect on the postretirement benefit obligation $ 2,660,000 $ (2,077,000) On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”) was signed into law. This law introduced a prescription drug benefit under Medicare. The employee obligations and post retirement costs in the financial statements reflect the effects of the Act. The approximate benefits expected to be paid in the next 10 years are as follows: Gross Benefit Gross Subsidy Net Benefit Fiscal year ending: Payments Receipts Payments 2025 ................................................................$ 479,000 $ 27,000 $ 452,000 2026 ...........................................................................502,000 27,000 475,000 2027 ...........................................................................502,000 28,000 474,000 2028 ...........................................................................529,000 33,000 496,000 2029 ...........................................................................536,000 39,000 497,000 2030 to 2034..............................................................3,267,000 272,000 2,995,000 NOTE 12 - SUBSEQUENT EVENTS The Institute evaluated its December 31, 2024, financial statements for subsequent events through April 24, 2025, the date the financial statements were available to be issued. The Institute is not aware of any subsequent events which would require recognition or disclosure in the financial statements.
The Institute has a defined contribution plan available to all employees. The Institute makes a contribution equal to 10% of the participant’s eligible compensation following two consecutive years of service. Employer contributions for 2024 and 2023 amounted to approximately $3,657,000 and $3,202,000, respectively. Deferred Compensation The Institute maintains deferred compensation plans for certain key employees, which provide that a certain percentage of those employees’ eligible compensation be accrued for the benefit of the participant. Benefit expense related to these plans for the years ended December 31, 2024 and 2023, totaled approximately $78,000 and $36,000, respectively. The fully funded deferred compensation payables for the years ended December 31, 2024 and 2023 totaled approximately $1,618,000 and $1,358,000, respectively, and are included within accounts payable and accrued expenses on the accompanying statements of financial position. The related investments are included within prepaid expenses and other assets on the accompanying statements of financial position and are considered to be Level 1 within the fair value hierarchy. Postretirement Health Plan The Institute provides certain health insurance benefits for retired employees, through its Practising Law Institute Health and Welfare Plan, which has been frozen since January 1, 2018. The Institute’s employees hired prior to January 1, 2018, may become eligible for those benefits if they reach minimal retirement age of 50 with 20 years of service or age 60 with 15 years of service with the Institute. The Institute funds its postretirement benefits costs on a cash basis. The Institute’s actuary performed the computations required for financial statement disclosure as of December 31, 2024 and 2023. The following table presents a reconciliation of the changes in the Institute’s postretirement health insurance obligations and a reconciliation of the funded status of the amounts recognized in the Institute’s statements of financial position at December 31, 2024 and 2023:
2024
2023
Reconciliation of benefit obligation: Accrued postretirement benefit obligation, beginning of year................................................... $ 13,597,000 Service cost........................................................................ 484,000 Interest cost........................................................................ 678,000 Participant contributions..................................................... 123,213 Actuarial net (gain) loss..................................................... (946,627) Benefit payments. ............................................................ (641,586)
$ 12,208,000
443,000 636,000 102,382 813,829 (606,211)
Postretirement benefit obligation, end of year............ $ 13,294,000
$ 13,597,000
Fair value of plan assets........................................ $ - The following table provides the approximate net periodic postretirement benefit cost for the Institute for the years ended December 31, 2024, and 2023: - $
2024
2023
Service cost.................................................................... $ 484,000 Interest cost............................................................................ 678,000 Net amortization and deferral............................................... (104,000)
$
443,000 636,000 (166,000)
Net periodic postretirement benefit cost............. $ 1,058,000
$
913,000
The following table represents the reconciliation of the funded status of the plan: 2024
2023
Fair value of plan assets................................................. $
-
$
-
Benefit obligation............................................................. (13,294,000) Funded status........................................................ (13,294,000) Unrecognized net (loss) income........................................ (2,030,000) Net amount recognized......................................... $(15,324,000) Weighted-average assumptions: Discount rate....................................................................... 5.69% Rate of compensation increase........................................... 4.00%
(13,597,000) (13,597,000) (1,074,000) $ (14,671,000)
5.06%
4.00% The discount rate reflects the rate of return on high quality fixed income securities. The average annual assumed rates of increase in the per capita cost of medical and dental benefits are 4.50% for 2023, 2024 and 2025, and are assumed to remain at that level thereafter.
13
2024 Annual Report
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