r • • •

I..

I MICIDGAN EDUCATION SPEC . ~

REPOR ONFINAN JALSTTEME -"8

YEARS ENDED JUNE 30.2008 AND 20'7

, ~

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-~"

c·· ON"ITEN':TS
'.~ ..... ' . . I.,' , _ ,'.1

,il

fudepe _den" audit,ors," report ~i!!!!11 ~ II'~I

•• , 1oI!!II."!IIW.. I • • !II' II!!I !I.. .' 11 • . • •". JIio • • • 'iIi • • MJ - . iii ',. 11'. .'11''''' ••• '.'!II,". iIi_ • • • • ·iiI • • • • • Iii iii "'. 1

Financial statem.ents

S'tatements of net as,sets av,ai ,able' for bene:fits and, 'b'enefit ob,ligations !lliii IMI ~ It • . • ,2

Stateme;nts o,f changes in net assets available 'or be' efits

and benefi" obligation,s. 1I!!I'1!! ~ ,III!!II'!!.. ' . . . .' • • • ' .~!II II" iii ,II ur.i1i .lU, ,hi. 1• • 1 ••• ·_· ~ _
. .II'.. -3

'Notes to finanIciaJ. statem,ents - ~.i!!! ••• ~w. '. .

.' ..
iii
. - . . . . . ill! i!!!1 • • 1II!11' • • !II -' _ • 4 23 _I

J
 _I _. _ _ _ • Ii _ _ _... _ _ . . . .~ _

Lamonte T La o'r imotlly H.A,dams

I

Bruce ]. D, mn Da ~d B. Caldw'ell
. .•. ,.aner, ]efnreyC,Ste eD5
Lin,da '. Schirmer
Edward L. Will anlS
Iinl,olhy J. Orians
t n

Costerisan'
Ste .en .'," Scott
David 1-,-. Raeck
Den 1_- i D. Theis
]an15 A. Me' eele,"
Rob'e .', E.. ,Mille.t,.Jr.
&> Elli's, Ee, S '
.·.teven
:: B'",. R'0 bb·
C
. IDS
, '·es·· E," IY"'qu~'st
am
' , " . ' , ,'c'
Walter E Maner,]r. (192,,20'0 4)
~= ~ Certified Public Accountants ·1Ili __ , .... I .•. "·e.·T.".
Flo d L. Cos:e is~tn
James R. Dedyne I e·onA. ElI-· (1933-1988)

JND.EP'ENDENT AUDITORS' REP'ORT

the' B08."fd of Trustee,s

-0
I
- l,gan Edlucatj,on.·S-··.pecla,
M'-,e ·'1 "
1_ ••..
I ServJ,ces .'A·.ssoclatlon
I 'I!' tI' I .

W,e b,av'e audited the acco,mpanying stateme.nts of ne', assets ava·]able £0 b1e:nefits and benefit
o::·bl'·:,,:.'.,.-t~I!····:···· .~ -,e
. . 19a1]Ons O.e-fMi······· ·'hi·'--,...-.. EI.,.u,ca
.gan.
Ii

...... ,.~. ·IS'··

d·" .: It·Ion s'_peCla " ',A",
_' ervlces ··-·······~at·,·,
~ ,; SOCl
Ii ..
~ lion ......as 0 f' une.,,·
1
"-"""3-0'" 2''-. 0"'0-'8-·' an~_
·1·dZ-·:O:O"·'
~.,~ . .• _7···
",an','. d" th·'
< .- -···e ,re,··l····-:-·d·'
.' ..•. ae > .

statements of Ic,h,anges in n.et assets lavallable fo" b,en,efits an·d 'en:efi obligations 'for t e ,years then lended I.

These financial statements are th '" respo.nsibllity of the Asso,clation's mana,geme.nt_ 'Ou re'sponslbl]ity is to
. expresis an opinion on these finan'cial statements 'based Ion o'ur audls:.

'We e,ond·u.cted Q'ur ,audits in accordance with. a~itm.g standards generally accep~d in tho United States =.

0" "Amen,lea. Those standards require that we p: an and. ·p,e.rform the aud"t 0 obtaIn f'easonab ,' e assurance a,bout
whether th,e financial stateme· ts, ~e fr"ee of material " sstatemlent An audt inle] :des examIning, on a test
b,asis" ev·dence Suppolrtin,g.h· amounts' land disclosures in the fmanlcial statements. An audit also inc 'udes
asses,sing the ,accountID"g' princip es used and significant estimates made b1y ID,anage,ment, as well as evaluating
I

th1e overall finanCIal statement presentati,on. Wre believe that OUf' ,audits p1fovide a--,e,ason,able basis..__'or our
,
opInIon.

In 0 .If opinIon, the fmanciaJ statements· eferred to above present fai i a1' material respects the 'y
financial s atns of i'ichigan Education Special SelVices Assoclafon as of June 30, 2098 and 2007, and the
l

C ranges in Its fi lanclal status for th,e years then ended in conformity with racco·u,·. ti g principles generall,Y
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ac·cept ed ,m th' . U t ·d S·t t
.'_eOl,eq,-a·es, f" Am
Oce .·erlca
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544 Cherbo 1'. Drive • Su·te 200 • Lansing, MIC . iga ···4891 7-50 0 • (517) 323-7500 .• Fax (517) 323-6346 www.mcecpa. com
"
 l\IJICID'GAN EDUC'A ',1 0 SPEICIAL SE'VICEIS ASS,OCIATION
1
1

'

ST ''''TE-'i:t'm,'I'
_,', ,.ft, il\~NTSO'''.'' ••FNETAS'
"",~, ,-'",', "S'ET'SAV"AlLAB-"
.." ,. ,,' ~', .' "LEF'O'-""RBE-
I' I NE' FITI'S'1
,.',-=--., .' ",I", ," '. ',' '. .,,1 ." 1_:

"" ,': 'B--.ENE,'.F"IT'- DB'·L'IGA:·TIl'0"'N,IS'·

AND
' ' ,, .,.' , ',' , ,I, ,',: '. ',' "

JUNE 30, 2008 .•' " '2007

2007
ASSETS:
Ca ~,h, and cash equiv,ale,nts, $ 3],5 06,6,4,56 $ 24,389 1,94
Investments (Note 3) 233,869,2811 237,7'27,,138
Co tributlons rece, vahle from or on behalf of members 6,,796,605 , _,:J"'7'4
11 '.. ,., ,,'8'2S
,., ', . .
Rate stabil~zation reserves W"ith nn,derwriters (Note 4) 1514"'· '7'5· 5~, '3:.,3"3-.
" ' ',I " -' ,-' ,1'- '
1

137,61,4,788
Miscellaneous receiv'ables and prepa,yments . 1,484,1048 1,39,5,,764
Deferreid co,mpensat·on deposits (Note 5) 484,62,8 '72'4,-',
.. 46"8"
"~. '" "

Property a Id e'q'uipm,ent, ,ess accumulate,d

depreciation (N'lote 6) 16,978,5'49'-

TOTAL AS,S,ETS 44 - 4349-

,,." 9",~, .,,:,1<00- 43-094-
'J
'.'

4 -
_,I,.~ 9".57
- ," .' I.

L·· lAB,,·,
, ,. "'. '
-, S-,
" ,.', ·IL·.- TIE-'"
".' -
II
II

Claims draft outstanding 4,273,863, 4~,:-'9"26'

',' 1 .. ' "'" 123'
.. " .... '.

Accounts payabJ,e 2,10,87,274 2,080.311

Due to insurance companle,s 11 ,99 ,79'7' 13,3198'1648
Ac,c,rue,d payroll and related '-'terns, 4,444,586 4, 722,,84,2
Accrued C ,a'-ms proces"in,g exp~enses I ,7-"5'0'
"" 500
.. ""
.
I
," ' "'.
I
,,,7,50.500 1

Me- 'biers' co--trlbutions received in advance

c
. 24~4180,93,8 23, 040,6,,93
Deferred compens.ation payable 4,84,628, 724,46,8
Ac,cnI1ed pension liability (Note 8) 131~_, ,85",882 1,2,14 939'
Accrued r'et~, ee - ealthcar'eenefits (Note 9) 14,518,289 1 923,933
,otes payable (Note 10) 7,262,,5'00 7,787,500 1

TOTAL, LIAB . ,ITIES 7]5'69,957

'NET ASS,ETS AVAILABL,E FO'R BENEFIT'S IN

EXCESS IOF' BENEFIT OB,LIGAT ONS, ,$ 364,954,,643 500,
359.,-37'9,',--
.
1

THIS NUMBER REPRESENTS THE ACCUMULATED NET PROFITS MESSA HAS EARNED. JUST
BECAUSE IT IS CLASSIFIED AS A NON-PROFIT DOES NOT MEAN THAT MESSA CAN'T EARN MONEY.
IT'S JUST RESTRICTED ON WHAT IT CAN DO WITH THAT MONEY.

JUST KEEP IN MIND, AS MICHIGAN SCHOOL STRUGGLE TO PAY BILLS BECAUSE STATE FUNDING
HAS NOT KEPT UP WITH INFLATION, THESE EARNINGS REPRESENT FUNDS THAT COULD BE USED
TO KEEP TEACHERS EMPLOYED. NOTE THAT THIS
CONTAINS
MESSA IS JUST PULLING MONEY OUT OF A CLOSED LOOP SYSTEM AND SACRIFICING TEACHER NONQUALIFED
JOBS IN THE PROCESS. PLAN BENEFITING
THOSE EARNING
OVER $225,000
PER YEAR.

Slee notes to financial state ,-e,nts 2

 MICIDGAN E . UCATION SPECIAL S ,'VICES ASSOCIA' _- .•. I
1

STATEl\1ENT'S '~" CHANGES IN T ASS·ETS' 'AIL,', LE '0,. BENEF, .

I I. '

AND B,ENEFIT 0,: L ·GA'TI-.· .S

YEARS ENDED JUNE 30, ,2 -08.AND 20 7 1
..

2007'

I
" 1,1 7,656 34 1,195)92_ ,391
74,146,2,0 . 72,758,598

7 ~2'7 986
J
,
I
THIS WILL BE
WORSE AS
23',' 77 486
MAKET TANKED
AFTER THESE
,930,404
STATEMENTS -
WHAT KIND OF
INVESTMENTS
WERE MADE
HERE?

. 135 29 5,97 '

1
1,130,37- ,93'0
1

2 ,278,589 21,5 -7,683

-------- ------
,15[6,574,566 '151 "e 92,613
54,855,72 5,8 105' 840
1

1,2 1 ,'30,28'7, ,209,9,9- 453

et mcrrease be .ore refund 8,141, 16 9 ,421,- 12
Customer savln,gs refu. d 2 ,290 .77 1
1 625,703
Increase ,II, '-et as,sets av.ailable for ben.efits 29 _-,3 ~3'93 103 047, 15
CHANG, - IN BEJF1T IOBLIIGATIO'· -s~
'penece 'ating adjustment 6,464,194
Net ln1crease - 'et ,assets avall'ab e for' enefits In
e 'cess. of benefit obliga-' 0 '. before ado_ tion ,of
S, A _. 0 ' - 58 and p,ens,ion and retire1e heal .
I I

benefit C anges other than. "et penod·c benefit cost

I + 109,5'11 309
EFFEC' OF,' DOPT ON Q,F RECQ'G" ITIO . , , .
:MEA, UREl\1ENT DATE P .0 S as QIF 1
'

SFAS._ Qot 158 , 4 850)..

C· 8·9
. ,.

PENSIO_ AND RET'IRE'E HEALT BENEFIT CHANG- S

OTHER THA ~'. ET PERlODIC BENEFIT COST (2~,856,250

_ et . cr ,ase IDe assets availab e for

I.

benefi s 'in excess of bene 0 - i.gat ons 5 '75 43 90,.596,459

.E .SE '. .AV· '.' __ LE 0 BENEFITS IN EXCESS
l '.

OF,BE ·.-P, T OIBLIGAT 0', S'~ ,

Beg -nnin,g lof year
E, d of year $ 359,379 500 1

II'

See otes: to financial state' e s.. 3

 ]
J MICIDGAN EDUCATION SPECIAL SERVICES ASSOCIATION
NOTES TO FINANCIAL STATEMENTS

] NOTE 1 - NATURE OF ORGANIZATION, RISKS AND UNCERTAINTIES

] The Michigan Education Special SelVices Association (the Association or MESSA), a Michigan
nonprofit corporation, selVes as a voluntary employee's beneficiary association (VEBA) providing exclusively
for the payment of life, health, accident, or other benefits to participants or their dependents or designated
] beneficiaries.

Under the Bylaws of the Association, eligible participants include any ofthe following:

] Any employee of an educational agency in which a local association of the Michigan

Education Association (MEA) is the recognized bargaining agent and has negotiated MESSA
benefits for its members;
]
Active, associate, retiree or student member of MEA;

] Any employee of any affiliate of the Association; or

Any retirant eligible for benefits under the Public School Employees Retirement Act of 1979.
] MESSA is the policyholder for the member-participants of the VEBA.

] As a VEBA, MESSA purchases group life, health and accident policies from recognized
providers of these benefits. Net assets must be used exclusively to provide benefits for
BUT THAT DECISION IS LEFT UP TO MESSA,
members. NOT THE MBMBERS OR THE DISTRICTS THAT
PAY FOR THESE COSTS!

] The benefits that are provided are fully underwritten by providers that are the insurers ofthe
benefits.
] The benefits provided are generally contained in collectively bargained agreements between
school districts and collective bargaining units.

] Benefit contributions are received primarily from Michigan school districts pursuant to
collective bargaining agreements covering MESSA members.

] MESSA assists in administering some ofthe benefits provided to members thereby acting as a
·third-party administrator under Michigan law.

] Since substantially all participants are employees of public school districts, MESSA is not subject to
the provisions of the Employee Retirement Income Security Act of 1974.

] MESSA is a member ofthe Michigan Education Association group of entities (MEA Group) which
also includes Michigan Education Data Network Association (MEDNA) and MEA Financial SelVices
(Financial SelVices). See Note II regarding related party transactions.
]
4
]
1
 ]
-
J MICIDGAN EDUCATION SPECIAL SERVICES ASSOCIATION
NOTES TO FINANCIAL STATEMENTS

] NOTE 1- NATURE OF ORGANIZATION, RlSKS AND UNCERTAINTIES (Concluded)

] The Association is required to disclose significant concentrations ofcredit risk regardless ofthe degJ ee
of such risk. Financial instruments which potentially subject the Association to concentrations ofcredit risk
consist principally ofcash, money market funds, bonds, mutual fund investments, receivables, and amounts on
] deposit with insurance carriers.

The Association deposits its cash and cash equivalents with high-credit-quality financial institutions.
] Such cash balances may exceed the federally insured limits at certain times during the year. The Association's
investments are broadly diversified in numerous companies and industries and, in the opinion ofmanagement,
are subject to minimal credit risk.

] The Association's receivables are primarily due from local school districts located throughout the State
of Michigan. See Note 4 regarding deposits with insurance carriers.

] Collective bargaining agreements cover approximately 85% of the Association's personnel.

] NOTE 2 - SUMMARY OF SIGNlFICANT ACCOUNTING POLICIES

Basis ofAccounting - The Michigan Education Special Services Association maintains its accounting
] records on the accrual basis of accounting.

Cash equivalents - Short-term (i.e., maturities of three months or less) highly liquid investments that
] are readily convertible to known amounts of cash and present insignificant risk of changes in value are
considered cash equivalents. .

] lovestments - lovestments are stated at fair value hased on quoted market prices when available. 10
general, bonds are recorded at estimated fair value based on yields currently available on comparable securities
of issuers with similar credit ratings.

] Accounts receivable - Accounts receivable are stated at the amount management expects to collect
from outstanding balances. Management provides for probable uncollectible amounts through a provision for
bad debt expense and an adjustment to a valuation allowance based on its assessment ofthe current status of
] individual accounts. Currently no allowance for doubtful accounts is considered necessary. Balances that are
still outstanding after management has used reasonable collection efforts are written offthrough a charge to the
valuation allowance and a credit to accounts receivable. Changes in the valuation allowance have not been
] material to the financial statements.

]
]
5
]
 ]
1 MICIDGAN EDUCATION SPECIAL SERVICES ASSOCIATION
NOTES TO FINANCIAL STATEMENTS

J NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

] Property, equipment and depreciation - Assets are stated at cost and depreciated over the estimated
useful lives primarily on the straight-line method. The Association's policy is to capitalize assets with lives in
excess ofone year and cost greater than $1,000. Cost ofrepairs and maintenance are charged to expense when
incurred.
J
Deferred compensation - Amounts payable to participating employees under the Association's deferred
] compensation plan are recorded currently. Assets have been segregated through insurance company
investments to meet the Association's obligation..

Experience rating adjustments - Experience rating adjustments are determined by the underwriters and
]
THIS IS EARNEB
BY GOOD HEALTH
OF MEMBERS -
recorded by MESSA for each policy year ending June 30. Favorable adjustments are recorded as an asset to GIVE IT BACK TO
THEM!
the extent considered recoverable; an experience deficit, if any, is recorded as a benefit obligation if it is
probable that the deficit will be applied against future premiums or experience rating refunds.
]
Accrued claims processing expenses - As a third party administrator, the Association processes certain
benefit claims. Claims processing expenses attributable to claims incurred but not paid are accrued based on
] the Association's historical ratio of processing expenses to paid claims.

Members' contributions received in advance - Contributions from or on behalfofmembers applicable

] to future periods are deferred.

Compensated absences - The liability for vested vacation and sick pay is accrued at the time such
] benefits are earned.

Retirement - The Association has a qualified defmed benefit pension plan covering substantially all
] employees. The funding policy provides for payments to the Trust based on ERlSA funding requirements. The
Association also has a nonqualified defined benefit pension plan, the Benefit Restoration Plan (BRP), that WHAT'S A
NONQUALIFIED
covers employees whose benefits calculated under the formula specified in the qualified plan would exceed PLAN? ONE THAT
BENEFITS
EXECUTIVES

] statutory limitations. A third retirement plan is a 40 I (k) arrangement under which employees may elect to
defer a portion of their salary to be contributed to the plan. The Association makes no matching or other
EARNING MORE
THAN $225,000
PERYEAR! GOOD
WORK IF YOU
CAN GET IT, BUT
contribution to this plan. DO MEMBERS
KNOW THIS IS
HOW THEIR

1 Postretirement benefits other than pensions - Health insurance and similar benefits provided to retirees
who meet certain eligibility requirements are accounted for each year as the employees earn the benefits.
MONEY IS BEING
SPENT?

] Estimates - The process of preparing financial statements in conformity with generally accepted
accounting principles requires the use ofestimates and assumptions regarding certain types ofassets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as ofthe date of
) the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.

)
6
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 ]
MICmGAN EDUCATION SPECIAL SERVICES ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
.,
_I NOTE 3 - INVESTMENTS

] The following table presents the fair values of investments. Investments that represent five percent or
more of net assets are separately identified with an *.

2008 2007
J Cost Fair value Cost Fair value

Investments at fair value as

] detennined by quoted market
prices:
U.S. Government securities $ 5,330,390 $ 5,052,941 $ 7,105,420 $ 6,671,056
J Common stocks
AXA Rosenburg
86,611,203
27,062,923
91,449,501
23,897,419 •
79,616,742
19,983,791
90,186,258
29,446,338 *
Vanguard Institutional Index
] Fund
Western Assets Fund, Inc.
27,075,682
76,066,000
29,952,043 •
79,990,015 •
25,037,079
70,466,000
32,918,644 •
75,542,780 •

] 222,146,198 230,341,919 202,209,032 234,765,076

Investments at estimated fair

value:
] Corporate bonds 3,642,686 3,527,362 3,097,31 I 2,962,062

Total investments $ 225,788,884 $ 233,869,281 $ 205,306,343 $ 237,727,138

] Unrealized gain $ 8,080,397 $ 32,420,795

]
]
]
]
]
]
7
]
1
 ]
] MICmGAN EDUCAnON SPECIAL SERVICES ASSOCIATION
NOTES TO FINANCIAL STATEMENTS

] NOTE 3 - INVESTMENTS (Concluded)

] Net appreciation (depreciation) in fair values:

2008 2007
Unrealized Realized
J gains (losses) gains (losses) Total Total

Invesments at fair value as

] determined by quoted market
•
prices:
U.S. Government securities $ 156,915 $ (56,478) $ 100,437 $ 52,184
] Common stocks
AXA \ Rosenburg
(5,731,218)
(12,628,051 )
2,404,581 (3,326,637)
(12,628,051)
7,959,713
6,145,976
Vanguard Institutional Index
] Fund
Western Assets Fund, Ioc.
(5,00~,204)
(1,152,765)
(5,005,204)
(1,152,765)
4,774,313
4,523,261

(24,360,323) 2,348,103 (22,012,220) 23,455,447

]
Iovesmeots at estimated fair
value:
] Corporate boods 19,925 16,994 36,919 22,039

Total invesmeots $ (24,340,398) $ 2,365,097 $ (21,975,301) $ 23,477,486

]
] NOTE 4 - AGREEMENTS WITH UNDERWRITERS

] l\1ESSA has entered into experience-rated contracts with Blue Cross/Blue Shield of Michigan
(BCBSM), BCS Life Insurance Company (BCS) and CIGNA to provide for member benefits.

] Under tbe contracts the liability for claims incurred but not reported is retained on the books of the
underwriters. While the actual benefit cost remains the responsibility ofthe underwriter, tbe Association will
incur tbe expense of processing certain claims during the run-out period in its capacity as a third-party
administrator.
]
. The agreement with BCBSM provides for the accumulated underwriting results of all prior rating
periods to be debited or credited to a Rate Stabilization Reserve (RSR), which is to be refunded to l\1ESSA
] (positive balance) or recouped by BCBSM (negative balance), in accordance with the provisions of the
agreement. In the event of contract termination, the recovery or payment of tbe RSR balance is subject to
certain limitations.
J AGAIN, THIS MONEY BELONGS TO THE DISTRICTS THAT
PAY THE PREIMUMS. MORE TO THE POINT IT BELONGS
TO THE TEACHERS AND PUBLIC EMPLOYEES THAT
8
)
SACRIFICE CURRENT PAYROLL FOR THIS COST.

1
 ]
] MICIDGAN EDUCATION SPECIAL SERVICES ASSOCIATION
NOTES TO FINANCIAL STATEMENTS

] NOTE 4 - AGREEMENTS WITH UNDERWRITERS (Concluded)

The agreement with BCS provides that the annual underwriting gain or loss is calculated based on
] various factors including premiums, benefits and claim reserves. The underwriting gain (or loss) from the
annual seltlementwill be added to (subtracted from) the Association's Rate Stabilization Reserve. In addition
to the underwriting gain or loss, the RSR is charged or credited for other factors such as rate recoupments and
] credits, investment income and other miscellaneous items. The RSR refund/recoupment and contract
termination provisions are similar to those of the BCBSM agreement above.

MESSA has funded a Premium Stabilization Reserve (PSR) at CIGNA to be used to stabilize
] contributions from members in the event of future adverse experience. In the event ofpolicy termination the
reserve account will be used to satisfy any experience deficiency related to the policy and incurred prior to
termination. Any balance will be refundable to MESSA.
]
An analySis of changes in the rate stabilization reserves follows:

] BCBSM
2008
BCS Total 2007

] Balance, beginning ofyear $ 133,949,356 $ 2,849,747 $136,799,103 $ 79,258,412

Underwriting gain (loss) 31,545,612 10,121,487 41,667,099 51,973,075

] (Utilization) recoupment for

premium stabilization (57,437,650) (57,437,650) (13,966,233)
Customer savings refund 21,290,277 21,290,277 11,625,703
Rate recoupment - BCS traosfer 5,901,995 (5,901,995)
] Investment earnings and other 5,400,965 346,112 5,747,077 7,908,146

Balance, end ofyear $ 140,650,555 $ 7,415,351 148,065,906 136,799,103

] CIGNA 6,689,427 815,685

] Net rate stabilization reserves $ 154,755,333 $ 137,614,788

Included in the statement of

] net assets as:

Rate stabilization reserves $154,755,333 $137,614,788

]
. MESSA received $70,452,156 from Blue Cross for its TPA Services during 2008 and $69,083,486
] from Blue Cross for its TPA Services during 2007.

]
9
J
]
 MICillGAN ,-. DUCATION SPECIAL S,RVlCES ASSOCIATI:'O'N "

NOTES ITO FINANCIAL STATEMENTS

NOTE ,5 - DEFERRED COMPENS,ATION DEPOSITS,

The Assocation has deferred compensation deposits with the Prudenfal Insumnce Company. Deposits
were $4184,62,8' and $724,46,8 for' June 30, 2,008 ac,d 2007, respectively.

N'O"'TE 6- PR'OPERTY' AND"" EQ'UlP".ME'NT

, .' .. ' ......, R .' .' .. ' '., .' '.' .:_ ', I .. , '. ' ..

..

Major classes ofpro.perty and 'equipment ,consist of the fbl].owing~

J
L[te .'. y.., ears 2008' 2007
"I

J[ .
Land ,and mprovements $42.3 340 $ 42,3,340
Buildings and impr'ovements 15 - ,40 '4,,-··~8··J6~,
. ....," I' 5··4"·
i
, _~4,47.l,l,36
,

IOffilc,e equipmen, and other 5 10 27,492,532 1

24"469,,,261
Work in pro-cess - 1,,462,394

42,50 2,026
1
40,,826,,1,31
Leg,s accumulated d"eprec~atl0n 25,,523,477 23·,102,,851

Net ,p,rope,rty and equipme'nt $

2,,460,78,9 5-, 06,3 ,.5.··.·3~2

. -

In, Marc' 974, the Intern.aJ Revenue S,ervice determined the Associatio.- was ,exempt from inco,me
taxes und,er prov.is ions, ofSection, 50 I (c)(9) o'fth1e Internal Revenue Clode,~ 'The ASSOclatioln has since arne'oded .
Arti·.·.ieII'es o~f"In.corporatl,on..
Its:~;·,
iii l! . h oplnlo,n o~fm,anagelTI'ent,
In t'u:e
I·
' ill th A
... e ,,',SSOclatlon
Ii!! Ii "fi' d und.er·
,contlnu,e: to b. e qua lle~., 'II'" 'I!

SectIon 501(c)(9) of the Internal Revenue le"ode.,

10
 ] •

] MICIDGAN EDUCATION SPECIAL SERVICES ASSOCIATION

NOTES TO FINANCIAL STATEMENTS

] NOTE 8 - PENSION BENEFITS

] The Association participates in the MEA Group defined benefit pension plan (Staff Plan), wbich
covers substantially all ofMESSA's employees. Benefits are based on years ofservice and the average ofthe
three highest years' compensation during the last ten years ofemployment The Association's funding policy is
] to contribute annually the amount, as calculated by an actual)', necesSaI)' to meet ERISA funding requirements.
Contributions are intended to provide not only for benefits attributed to service to date but also for those
expected to be earned in the future.

] The Association also has an unfunded, nonqualified, defined-benefit retirement plan designated as the
Benefit Restoration Plan (BRP). It covers participants of the Staff Plan who accrue benefits in excess of
statutory limitations prescribed by the Internal Revenue Code. Participants are vested in their benefit after
J completing five years of service, or when they become vested under the Staff Plan, if earlier.

In September 2006, the Financial Accounting Standards Board issued Statement of Financial
] Accounting Standards No. 158 (SFAS No. 158), Employers' Accountingfor Defined Benefit Pension and
Other Postretirement Plans. This new standard requires employers to (1) recognize in their balance sheets an
asset for a plan's overfunded status or a liability for a plan's underfunded status; (2) measure a plan's assets
] and its obligations that determine its funded status as ofthe end ofthe employer's fiscal year (eliminating the
alternative of a measurement date that could be up to three months earlier under prior standards); and (3)
recognize changes in the funded status of a plan through equity in the year in which the changes occur.
] The requirement to recognize the funded status ofa benefit plan and the disclosure requirements are
effective for the year ended June 30, 2007, for the Association.

J
]
]
]
J
J
J
II

.,
J
 1
lVIICIDG - EDUCA ',0' SplE,ClAL SER' I-CES AS,SO,- • 10'
',0 _-S T!O FINANCIAL ST_' EME "

E ' -ENS,IO " -, IE "FITS (Con ·ue' ,"

- ..

T -e fol oWIng tables set forth the financIal state.ent di_ clo's res ,for the y'ears,endeld Ju -e 30, 2008 and
2007 res .ectively

-
2008 2007
] Change in projected enefi ,obi, ga Ion·
StaffPJan, BRP Total Staff 'Ian BRP otaJ

B,e efit obllgati D, at

beginning, ofyear 27~242,947 $ 1,86,' 127,244,8' 2 119,654 003 $ 16 924 $ 19 670,9271

Service co'''" 3,249~083 3,,249 083 3,446 589 3,446~ ,89

"anda ory em lory·e
COtrl' tJOnS 95,4,00 9~,400
Interes_ cost 8,2 1,320 16 8~23 J,336 7 3' 5,,37., 9518 '7,~46,,"'.J I

Ac _arial (gai ,) oss (865,396) 6,651 (8'. 8,,7,45) l21,866; , 3 38) I 5'0'8 8:28
, ':J '

·Ian amendm,ent 2 -0, ,102 2" 01 ,02

Bene Its paid (5,837, 48) (3,016) (5,~ 410, ',64) _....--iit- _

ProJecte' -en,cfit obl·garion a

end 0"- yc'ar 5,5]6 134,62,2.,92,4 1,86'

Chang ,« p I,an assets~

'ai ,alu'e 0 -'p Ian assets at
'~ d ofpri'o 'ear 26,029,873 126,0'2'9,873 07,47,6'173 I 107 476~731
AC_'I, al --eturn on plan assets (5, 11,219) (,1 1,2 9) 7,04 ':)685 7~O' 3~685
,·'mplo,'ercon ·"b',on 6~ 50:r-000 -,016 6,_53,0 16 6,150,000 2,979 6, 152~979J
E ~ployee contrib _ 10 S 9,400 95,400 84~,34 84,34 '
",erv·ce purchase contrib t~ons 110~036 110036 1

Benefits 'paId (5,8.17:7048) (3 016) (5,84,0,06,4) (2, '979) (4 727,1863)

-----
Fai val e 0 plan ,ass. s at
end of ear 12 437,042 126,029,,873 126,029, ,73
-----,----
~ unded status (13,,180,366)

ArnOll. t 'ecogn zed In the statem'ents of net aSlels ava:· ab Ie fa be, efi' , and benefi obligatIO ,_5, I

consis,' of:'

2008
StaffPIan BRP TalaJ StaffP'lan BRP To al

Ac'crue d pension liab-lily

1 ,3,185,-82

12,
 ]
] MICIDGAN EDUCATION SPECIAL SERVICES ASSOCIATION
NOTES TO FINANCIAL STATEMENTS

] NOTE 8 - PENSION BENEFTTS (Continued)

At June 30, 2006, the pension liability included an unrecognized net actuarial loss and unrecognized
] prior service cost in accordance with SFAS No. 87. The adoption of SFAS 158 requires plan sponsors to
recognize any unrecognized prior actuarial loss and unrecognized prior service cost. As a result, the net
liability reflected in the accompanying statement ofnet assets available for benefits and benefit obligations is
] the excess of the projected benefit obligation over the fair value ofplan assets, or the "funded status" of the
Plan at June 30, 2007.

] The adjustment in net assets not yet recognized in net periodic benefit cost is as follows:

Staff p.:::lan=--_ BRP Total

] Balance at June 30,2007 $ 14,714,493 $ (21,208) $ 14,693,285

2008 activity:
Prior service cost arising during the year 2,501,102 2,501,102
] Net loss arising during period 14,026,909 6,651 14,033,560
Amortization of prior service cost (256,674) (256,674)
Amortization of net loss (608,326) 1,387 (606,939)
] Total recognized in net assets
(additional pension liability) in 2008 15,663,011 _ _ _..::.8,,,,0~38,- 15,671,049
] Total adjustment to net assets $ 30,377,504 $ (13,170) $ 30,364,334

There were changes in plan provisions since the last actuarial valuation. Changes included grant
] service structure, employee contribution mandates, normal and early retirement ages, and optional form factor
subsidies. These changes were generally effective January I, 2008.

] Amounts included in net assets consist of:

2008 2007
Staff plan BRP Staff plan BRP Total
J Total. .

Prior service cost S (2,696,128) S S (2,696,128) S (451,700) S S (451,700)

Net actuarial (loss) gaio (27,681,376) 13,170 (27,668,206) (14,262,793) 21,208 (14,241,585)

J Additional pension liability (30,377,504) 13,170 (30,364,334) (14,714,493) 21,208 (14,693,285)

Cumulative excess ofemployer

J contributions over periodic

pension cost 17,197,138 (18,686) 17,178,452 13,501,419 (23,073) 13,478,346

J Net liability recognized in the

statement of net assets available
for benefits and benefit

J obligations S (13,180,366) S (5,516) S (13,185,882) S (1,213,074) S (1,865) S (1,214,939)

13
 MICHIGAN EDUCAITION :SPECIAL SERVICE '. A SOC- . 0 1

,OTES -0 FINAN . STATEMEI -TS

NOTE 8 - PEN,I·..ENEFITIS (CoD~~nue ')

Est mated amounts, tha will be amortized from addI -lonaI p,ens',oD, 1lab· tyo ,er t e next fisca 'ear:

otal

. .
. no,r ,se:rvlc,e cost
P $ 359 360 - 359,360.
Accumulated actuaria loss ",482,757 890 ,483 ,647
1

1,842, I 7 2
$ 890 $

,e, ,-, en[odic ,enefit Ie' t IDC' ,des the followi g:

2007
Staff Plan B'RP·'"
. -
Total, StaffPlan BRP Total

. erv' ce co,st
~' $3,,24908,3 $ "'" 24"' 9., 0".. . ,3..,
$"""', 1

" 3 1446,589 ""1

' .J,_'I,'.58'9
44'6' "'"
I terest cost 8,231,320 :6 8• ,"2'31
' , 3'"'6j'c 7,3 '5,3,73
1
.' 958 7,3 46,331
1

Expe., e1d .etuf - O~I assets (9~891,l22) (9 891,122) (.' 427,,9,) (8,427,895)
,', -ortization ofprior service leost 256,674 256,674 204, 3 ' 204,133
Amorti'zat·o, 0' actuar al ass 608,' ,26 (1.3187) ,60[6939 ,97,8',[8'90 (457) 978~433
---- 1

----
(1,371) (:. 2,452 910 [.'" J,
~ 5,4'7
. , 10'1...
9'0 50 $ 3,547,59,
- -
1

'. gnifi'- .' t actuaria assumpt·ons~

2008 200'7

Measuremen date J D,e 30 2008 J I. Die ,30, 2,007

.isco t . ate for financial . isclos' re 67,% 6,2S~
D ·seQ . . f'ate for expen,se 6.75% 625%
- -

Long-term rate of return Ion a· sets 8_00% 800%

Weighted av'er, .ge salary increase* 468% 4~68%

*'uture compensatIon i _creases based D'n years of se .ice ,-, 5% to ,2 ,5%.

The A,SSOC18 Jlon 's laccu ulated ben1efit ob ~,gatlo for the year enlded une 30 20 08 ..... d 2007 w,as 1

$ 27~520,429 an $c 19~360,6 7, resp ct ve y.

 lVIICIDIGAN E UCIATION SP,ECIAL SERVICE,S ASSOC
NOTES TO F "ANC'IAL, STATEl\rlE; ." ~,-S

The Assoc.J.atlo 's pens,·on benefi plan. asse. a I· atlon~ by asse", catego "I at June 30 is as fo'lows·

2008 2007
As.set category·
E'q' . ty ecurit e- 54 ·0% 6680%
Ixed 1., come eCuTlties 2" ·' -2, 0'0
1

··70
/

9. ,%
-ea estate
.-
,
.- 30,,70
~
0/
910%
Global asset al ocatio , 90YO
IOther 0.10'% 5 ]0%

100 00% 10000%

TheA[~loc at"'on'stargetasse I·],ocati,o [0, the pens 0' 'e 'efitslSohave5,5%ofplanassetsinvested.

, equity
10 , securItIes,
. 2'.1'0
0°.'-' to bIe comp.ns1e
· d 0' fi",:'ed'oome sercuntles
., · anemalnmg'~lo 0- oJ: bIe veste_
' I I I ' . d·l~ real
~<.~.
estate, an,d the remam,m,g 15% 'e invested in glob,at asset all1ocatio'n. The 0'_,." ectiv,e or t e P.lan IS to ,p'OV d,e
the greate t .1, etum consistent with a . .de t evel 0 . rIS . as weI as to excee . the rate of. nflatIon

The fol OWIng benefit payments, ',". lch reflect exp,e ted future .e "ice, as app op 'at _, are e~ .,ected to
be pa'd.'

StaffPI~ , BRP Total

20'09 823.70 2,772 $ 5,826, ,73

2010 6 06,4 8, 2 92 6,108,161 .
201 6,4,4 6,236
1
1,449 6,,447,685
2012 6. 984"1402 540 6,984,942
2013 7546~960 21 7,,54,6,,981
20 - - 2018 4,6, 745,481 46,745,4,81

Defined Contnbution Plan

,n add,!ton to the defined-bene-'lt plans descTl .e'd above, tlle·Asso'c"'ation partlclpates 'n a qu,alified
40 ](k) em,ployee sav gs plan, The employer makes" 0 :c,o tributions to this p'. ,an
1
1

15
 l\DCmGAN ,EDUCATIO ,,' SPECIAL SEI,VlCES ASSOC " TON
OTES TO FffiANCIAL STAll 'l\IE, -T ~
I,

NOlTE 9 - OTHER P'OST,RETJREMENT ,BENFEFITS

The AssocIation part'c'pates ~n' e MEA Gro . · , tiree .. eaI Be efi' an that prov"des certain
h1ea,lth" d'ental, vis, on, ,and _--e ins ranc,e benefit, Su stantlalyaIl.Associat~o' emp oyeescan beeD -~-e Ie ,1gi'le
fo -these 'enefits If they reach nonnal retirement age I_'e working fo ' theA,ssoc ·atlon an ave et servIce
,e'quiJie,me_ ts. The be',efits are provld,ed through i'n,suran1ce contract,

'I September 2006, the F-n,an,cial Account~ -g Sitanidards Board ssued'-atem-e t of F ancia
Acco" ' in,g Standardso. 158 (pAS ,58), Employers - AccountIng/or Defined Benrqit Pension and Other
Po /retirement Plans. Th-, new st 'dard re, lres em 'layers 0 (' ,,' reeo, lze ~ thelralance s ee an asset
for a plan's love,rfiJnded, status 0" a iabl Ity or a plan's und,eTfun lied sta~s; (2) measu. ,e a Pi an' . ~ assets and Its
ob 19at·ons th-'- determme its fu- ed s,atu' ai, ofth~· endf :.e em,~· ,oyer. fisc-, ye~ (el m at-ng the
J altem,atlve 0 a measureme,DI date that could, be' up to three month···~ earlier un_1e,r prior ,tandards, and (3)
relcognlZ c anges 1'- . ' e funded statu of a plan '.. 0 ~ gb eq ~ty in ' h-, year · . whic ,ee an,ges occu

'The req- ir1eme"-t to, 'e ognlZe t e funded status, ofa b,enefi plan.an : ,e disc o,sur-, require' i.ent.
are effectIve for the year ended. nne 30, 2007, for· . e Ass'c·a ion

J
 J
l-.J MlCIDGAN EDUCATION SPECIAL SERVICES ASSOCIATION
NOTES TO FINANCIAL STATEMENTS

.J NOTE 9 - OTHER POSTRETIREMENT BENFEFITS (Continued)

The following tables set forth the financial statement disclosures for the years ended June 30, 2008

J and 2007, respectively.

2008 2007
] Change in accumulated benefit obligation:
Benefit obligations at
beginning of year $ 63,355,707 $ 53,800,817
Service cost 2,720,790 2,799,085
J Interest cost
Actuarial (gain) loss
3,896,284
2,559,738
3,308,954
5,471,101
Benefits paid (2,431,122) (2,024,250)
J Accumulated benefit obligation at
end of year 70,10 I ,397 63,355,707

J Change in plan assets:

Fair value of plan assets at
] end of prior year
Actual return on plan assets
51,431,774
(2,748,765)
38,339,019
6,092,755
Employer contributions 6,900,099 7,000,000

] Fair value of plan assets at

end of year 55,583,108 51,431,774

] Funded status $ (14,518,289) $ (11,923,933)

Amounts recognized in the statements of net assets available for benefits

] and benefit obligations consist of:
2008 2007

] Accrued retiree healthcare benefits $ 14,518,289 $ 11,923,933

]
]
•

]
] •

17
J
1
 ]
] MICHIGAN EDUCATION SPECIAL SERVICES ASSOCIATION
NOTES TO FINANCIAL STATEMENTS

J NOTE 9 - OTHER POSTRETIREMENT BENFEFITS (Continued)

At June 30, 2008, the adoption ofSFAS No. 158 requires plan sponsors to recognize any unrecognized

J prior actuarial loss and unrecognized transition obligation. As a result, the net liability reflected jn the
accompanying statements of financial position is the excess of the projected benefit obligation over the fair
value of plan assets, or the "funded status" of the Plan at June 30, 2008.
] The adjustment in net assets not yet recognized in net periodic benefit cost is as follows:

] Balance at June 30, 2007 $ 17,449,094

2008 activity:
] Net loss arising during period
Amortization of transition obligation
9,423,045
(27,067)
Amortization of net loss (1,210,777)
]
Total recognized in net assets (additional benefit
liability) in 2008 8,185,201
]
Total adjustment to net assets $ 25,634,295

]
There were changes in plan provisions since the last actuarial valuation including retirement

] eligibility. These changes were generally effective January 1,2008.

Amounts included in net assets consist of:

] 2008 2007

] Transition obligation
Accumulated actuarial loss
$ (189,466)
(25,444,829)
$ (216,533)
(17,232,561 )

] Additional accrued retiree health benefits (25,634,295) (17,449,094)

Cumulative employer contributions in excess of

] net periodic benefit cost 11,116,006 5,525,161

Net asset (liability) recognized in the statement of net

] assets available for benefits and benefit obligations $ (14,518,289) $ (11,923,933)

]
] 18

]
 l\flCffiGAN
.
'D,U,CATION SPECIAL ISERVICES ASS,'ClAj~IOI'"
NOTES TO FINANCIAL S-'~'I,El\fEN ,S

Estimated amounts that w~'11 b:e amortized from addltionalpostretire,ment ,iabllrtyQver the nex fisc,a)
year:

Transiltion obli,gation $ 27,067

Accum,ulated
. actuaria loss 2, 100,6] '1

$ 2,127,16'78

Net periodi.c benefit oost include:s "'. ,e 'ollowing.

2007'

Serv'ic1e cost: 2"7·'"20,7,'',9-'10

- - $ 2'17991085
Interest cost 3,,8'9628' - 3,,308:,954
Ex"'pec"te'd r'e~"~
r ,':.' -.:LW.ll O""D asse'-"-s
r l .. -
"' - ..... :.- . :~.,_, I . ' " .'
(4,,11' ,,542) ('3.' 067.., 2'2)'.
. "
1

- - -- "

-:,' ':,ortizatlo Oc-~f tranSItIon

Am - Ii
0bI·'·'
.' 'gatl'on • oil
27'106'7 2,7',067 1

Amortizati.on of lactuar'- al gain . ,210,777' 1,,175,877

$ 3', .7'40 3'~': 76

, -,
1
r

,S19nIl, cant
,', ." II! . _ '!!Ifi'
','. .,

actuarla ass " ptio

' , .iii . ,
. :

s,.,
I:' "
I.'" I ,,-,. , . "

2007

MeasuT'ement date June 30 ,2,0,08

1 r')O-' 2-00'7
J.une J", , .

Dis,c,Qu,nt rate ~ 6~7'5% 16"'',. 2>.5,·'~.' O1'0

,l:.
-. 0' '. 0.1
Long-term rate ,of return o,n asset·. 8. '/0 8,0 0% 1

"'·
W ary'Inc ease * '
.· e:d,-aver,ag'e salI
. . . el.'ght 3.5'0% 3,_50%
Health care c'ost trend rates I

Curren -year tr,end rate 10.00%1

1
1.00%
,Ultimate trend r,ate 5.:1', 00°1:
/:0
I• . . . , 50 0% 1

Year ultima, e rate: is eached FY 20 16 1

FY 201 '.
Annual rate' o'f d,ecline' 0.50% -, 1 00% 1, OOOL
;,0,

:I: Futu e compe' .. ation increases blas1ed Ion ,years of servi c,e ,~ ,8.,5'% to 2 -,5%
THIS IS INTERESTING, THE PLAN
ASSUMES HEALTHCARE COSTS WILL
CONTINUE TO DECLINE AND AT A RATE
OF 1/2% TO 1% PER YEARS. SO WHY
EVEN HOLD SATBILIZATION RESERVES
FOR HEALTH CARE PREMIUMS?

19
 ]
r MICHIGAN EDUCATION SPECIAL SERVICES ASSOCIATION
NOTES TO FINANCIAL STATEMENTS

J NOTE 9 - OTHER POSTRETIREMENT BENFEFITS (Continued)

Assume healthcare cost trend rates have a significant effect on the amounts reported for the healthcare
] plans. A I% change in assumed healthcare cost trend rates would have the following effects:

HERE'S WHY THE PENSION PLAN WON'T BE

OVERFUNDED SOON. THE MASSIVE IMPACE 1% increase 1% decrease
] OF EVEN A SMALL INCREASE IN COSTS.

Effect on total service and interest cost components $ 1,251,543 . $ (1,005,119)

] Effect on post retirement benefit obligations $ 11,352,906 $ (9,234,102)

The Association's other postretirement benefits asset allocation, by asset category, at June 30 is as
] follows:

2008 2007
] Asset category:
Equity securities 69.47% 70.59%
Fixed income securities 27.58% 29.06%
:1 Real estate 0.00% 0.10%
Global asset allocation 2.45%

] Other 0.50% 0.25%

100.00% 100.00%
]
The Association's target asset allocation for the other postretirement benefits is to have 70% ofplan
'I assets invested in equity securities, 28% be invested in fixed income securities, and the remaining 2% in global
asset allocation. The objective of the Plan is to provide the greatest return consistent with a prudent level of
risk, as well as to exceed the rate of inflation.

J The Association expects to contribute $6,900,000 to the other postretirement benefit plan for the
year ended June30, 2009.
]
]
J
]
20
J
l
r "

MICIDGAN ,D'UCATION SPECIAL SE 'VI --ES A S,S,O CIATION

NOTES TO F' ',~ ANCIAL ST'AT -1\IIENTS,

OT~. 9 - OTHER IOSTRE IREMENT E' _ EFITS (Co ~ ti -

1 I _)

The ,01 oWing ,e' ts, which reflect ex -, ecte future se - ce, as ,app'ropnate, are e" peete to
_!

be paid:

2,009 2,397 985

20_0 2,6'38,950
20,1 2,942,66,0
2 0'12
1
.Ii
3 282,352
2013 3,640,364
2014-2018 2 ,1 "7,280.

A -SU~, 1 g : e Assoc -atlon "11 co,- tlnue 0 provIde a prescrip -~o~ dru.g ben to ret ees at ~, least
ac :'aria ly 'eq,ulvalent to Med·'care Part D" teA sociatio - w-Ilecel1e efederal su'_sidlary unde-- "
Medicare Pie'scnpti1oo Drug, Improvement and MO'd,em.ization ,Ac' of 2,003 (the Ac') - ,- e net period.,c
ost etiremen - be,nefit cost for Ihe fiscal year 'endi _g Ju- e 30, 2007 was -e ,ce by'? 4,,778 The' enefit cost
for J, ,- '30, 20 8 - -as red ced by , 627,,50

Estimated gross aID'Q,unt of s bs dy receipts·

2009 40,553
2010 8'~088:
20, 549-
20 12 1

7 0,8 ,I
1

2013, 87,985
2014-2018 86,3,796

21
 MlcmG~ ,~EDUCATI" NP ~,CIAL 8,E VI,CES ASSOCJATI,ON'
NOT S TO FIN',CIAL 8,TA EME" TS~

OTE 1 -N-TESPAYABLE

At June 30 2008, the Ass,oclatio - ,had, one ote ,aya 'Ie 10 tstand·ng 0 e ank In _ e amo' ' of
I

,$7-262,> 00
1

• not "equire, rna thly paym1e" 15 of $43,750 p ,s interest and matures in Apnl 2009 The 1
_

note secured 'by real estate,

The n,ote, pay,able ,mature as follows:

• ear endmg
J - e 30,

7,262" '00
.
The, Assoc ati n e" telied 1 to an-nte 'e ate swa", agree ' ' ,t_ at pr' ,'des fo . the " , soc at on to pa
l
II

,mterest for aev,en year penod at a fixed rate 0- 5 33 % on,~ otiona' pr nClp,aJ am,a ' nt of $10,,500,,000 wh' e 1 1

rece· 'ing-' , e '-est fo,' .'e ,same _Ie ,'od a' the ~ ,mOR ra 'e OD, " smn,e not 0_ :a, prin ,p'. aIDa 't lS sw- p as
been entered, mtQI as a ' edge agamst interest ' "te'-,ovelDe·~ts onu, 'en an - an ic~'pae_ vari",e rate
.,de. tedness total ,Ig $10,500,,00 at rno "', plus, 1..,4%, theli-by fixing the ,~ 'SO,clat·'O " effecti e rate at
lf

W I

6 73%, Inter s expe,-'~se for 2008 and 2007' W'8S $513,,760 and $5,60437' re,s ,- c' .e . T:' e'10 ,- agreemen
1

me,Iu,d'e certa ., covenants, me1u'd 'ng · ·

IDmlDlum , 1 s WI ' w- C'.' th e As
net asse,eve Cc. ,. ':soc a_ti,Ion"has co- .,- I"ed
I.
I
1,-,_

The As OClatlon has availab ea,rev,olvmg i eofcr,e_,itin",'I"e,i,ounto-: 0 000,1000 - eres'lon the

1, -e of,credt is e-, ua to 1·25% ,above the p ~ cerate (at, nne 30, 2 _0' -e, ime rate was 5.00~) As ofJ, ne
30, 200'8 Ian 2007, ,here was, 0 balane o'utstanding, ,esp,ectively~
THIS IS AN OLD STORY BUT STILL TRUE.
THE MEA PULLS MONEY OUT OF MESSA. IN
TURN THE MEA CAN USE THESE FUNDS IN
ANY MANNER OF ITS CHOOSING.

I "OTE 11- RELATED PAR, ':~ T.'" SA,CTIONS

rvrnSSA has entered, mto a, agreement w th rvtEA where y IvIEA prov' ,de'ervlces and fac] tIes to I I

ali 'ow the Assoc·at-on to expand significantly its efforts ill ar"eting an ·,erv-ce~ In re. JvffiSI 'has agree,
to pay 1v:1EA fqr he marketmg servAces, . d fa'Cllit'es - lovide B-Ilm ~' for aI' t' e servIce,s and facil.-ties
prov',~' ed ~ y l\4EA to the ASSOCIation for th~years, e 'ded J file 30, 2008 and 2.007 amounted to' ,3,,264, '.23 ,and
$3,276 .59 ,espect v,e y~

-bared ' ces

MEA p,ro'··ded finan,c al a C,QI nt· g,' "ll resources and CODle" de "very servI.1c·s on a [cost
I

reunbur emen basIS Pa ..... ent o:MEA for hese service for the years ended J e 30, 20 . . . . an 2007
amounted 0 $1, 04, 56 and $1,293,187 respeclVely.

::MESA p oVlded mfonna_·on techno ogy, acility serv . es, and telecommunication servIces to MEA
.. elm ursement- from MEA fohe yea ended une 30.200 and 2007 ere . 220,_00 an $ . 85,792,
res eC'lvely.

22
 'mG"AN'I'1 E'D"U'C:A"T'I'O"N S'"PEC"'!AL' S····E··R··VI···'C'-':E' 8 A's-, S"O-"C'"'JA'"T 0" .'
l\KTC"
lYll'_ I. '~I: 1 ..,I~·· ..... ".' ..... " , , _ , : . :...> 1 . ' .....
1
..... . , ' : '_,1, '..

NOTES TO FlNANClIAL S, IATEl\fE:" .·TSI

NOTE 11 - RELATED 'PARTY TRAN'SAICTI'ONS (Conclud,ed)

1VfESSA provides in,fonnati,on techno,ogy and te: eca'mmunications services to 1v1EA Fin,ancia:
Servl1ces., Reimbu sement fOf' these services for the year lended J' ne 30" 200,8 and 2007 were $72,542 and
$116,0'100: respectiv'ely

l\ffiSSA provides information technology and telecommunications services to the staff relrement
office Reimbtursement for these sielvic:es for the year end,ed June 30" 20081 and 20,07 were $,36,,799' and
$44,1000 .,esp1ectively.

'C1ontributions _,y the MEA Grou,p on b1e,half o,ftheir employees for ,in:surance c10verage amounted to
approXImately $9,700,000 in 2008 and $9,500,000 in 2007.

. ArilDunts due from, (to), elated ·parties at June 30 are as fo'l,ows:

2008

··'" 'A'
ME
.
'I
-'1','- .
.
_""0'
"
•..
$ (2,08,676) $ (228,243)
IvIE,A .'. inane!'al Serv':ces 30 2",471
MEA Buildin,g and: Site 189 148

$ (208,45'7) $
=======

The above amounts are included in miscellaneous

.
receivab'es and prepa--ents

..

2:"3'
.' I •
 F~S 0850 ('1/09) Office, of IFjnanc~at & nsur:anCB: Rea ula t:ion
or t' 'e fiscal year
F"anc"a Statem nt for Third Party Adm' istca_ors ( PAs)
Beg· · ng
Ii' Ilnl

,AJI TPAs fife ,8 finanCial! statem,ent at th'el time of theirinitial request for Certificate of Authority in Michigaln, ,and annualJly
thereafter Iwith' a $25 statement filing fee~ Use financial data for the TPA, not the TPA's parent comp1any' Ending

'au ffl1ay submit a lcompleted.indepen\dent' aUrdil In lieu of pages 2 and 3 of this form. The audit m'ust be acco.mpanied by
Statem,enf and fee a;re dueannuaUy by
Bin opinion pre,pared by' a CPA and must include all ofthe item,s listed on pages' 2 land 3 of thiS' for.m'. ,M'arch 1.5t for aU TPAswith a M'j'chigan
CerUficate ofAuth,D,rity~,

NameloflPA M-IC-
1- - _.''HIG-'A'-
i, f ..... I A~IO'N
''E'D"DC' ,! . E -=At
SP"':""'lCI- ~ _ISER'
~"~
.'VI Tt17
\.I.Ii. S'~ ,
.... ,_ ," I " . ' -
TPA Tax ID nu ber (FE N)

ASSOCIATIO, (MESSA)
3 I 8 I 1 I 6 ,4 I 11 6 ,13 J4
Contact .erso -arne a d fitle. (for inqukies re g.ardrng fs Financial Sta tame, t)

Jeffrey Nyquist
Contact person EMaJI address IConta'c' erson phone (With [area code)

jnyquist@.essa.org -17.336 .40316 1

AJ ~ ;nformat" .n above is required.. Please do not ea ve an:y S,pa,ces bl ~ - 'k

I I

lf11;portan'f change.-
I{this is 8 renewal filing, please be sure to complete and,attach form FIS 0865 ThirdParty ,A dministra1tor (TPA) .Jurat Page for Annual Ren'ewa/~
1

Incomplete filings ill be returned ,withou' review and could,subject' the TPA to penalties lor late ,filing.

, - - "

V,erif.ica,ti'on " --~

I ,swear under penafti'es of perju '.' that the j,- fo-matian above and lattached s true.
accurate ,a~d co\m~ret-·~
S',gnaw .'. . · :, '. Date signed Su ·scribed and sw,om to ,'efore me this
rJ. ..

•
17th dayof Feb uary ,20 09
Si'gne,r's name and " e (typed orprinted)
_ f~r,--e,:'y",
Je·.·,f"'- . • :y,,·q-,'.'UI1..
"'1_,8', t._
. , G'.enerla 1 CDuns e 1 I, . ::/'
Offteialsealandsit;Jnalureofnofary,,"

PA 2· 8 0 1956 as amen ded mquues submission and verification by Th~m Parry,Admi"niSlrators who, have,
I

or are quesfin,g a Michigan Certffica' ,e of AuU1Dri~'., ,allure '10 prope y cornp~.ete and file rOf amend· '''5
j

'form may reSl1 t in denial or revocatio , 10'1 Certi'fics!te Df Authoriiy ,Dr Dther camp janoe acUon..

Jlf this s an ANNUA.L I'nancial stat: ment filing (yearly -e e,waf), a filing fee 0 I
,2 H' ·8 due. '" Jude paylment wl:th 'the ortgl'naJ in,vo,lee· w'e ,- ,a led you.
Plelase ,att,ach a check for 251 payabJe rn US Dora -s -'0 -'State of' .' ichllgan'
I ..

If this is' your INITIAL ,financial statem'Bnt filing, pi/ease DO NOT submit this fee.

Dlffiee of':inanc 'J a d I'nsurance R,egufatlo

H
I __ nOff,icial use Dnly u _ _ _

[Pi_ease ~,a~l ,our 611 .. O'ttaa St.

1

com'=Jleted II Ing to~ PO IBol, . 30220

Lan' -ng, IMI 4B'909~77'2D

M'ic .igan Departm1e .t of ,Energy abor & _ 'no'.o Grow'-h

DIELEG is an eq uar opppo,rturu~ly e,mpf,oy,erJpmgram" ,
,Auxmary adJs. seNlices and ofher re,asonablle BcoommocalJions are available [upon request to individuals wHb.dis'ab~ i~fes. ..
Viisil OF Ronbne at: www.m·chrg'an"go,'v:/ofi Phone OFIR ,ai-free at: '·817-999..6442