If you haven’t already had enough fun working through the Governmental Accounting Standards Board (GASB) Summary of Statement No. 68 and net pension liabilities (not to mention the impact it’s had on your financial statements) then you’ll be all but delighted to hear that GASB Summary of Statement No. 75 – the GASB 68 of the other post-employment benefits (OPEB) world – is right around the corner.
The Ohio pension plans, including the State Teachers Retirement System (STRS), the School Employees Retirement System (SERS), the Ohio Public Employees Retirement System (OPERS), and Ohio Police and Fire Pension (OPF) are to become subject to GASB 74 for fiscal year 2017 and calendar year 2017. This will require certain necessary information to be available for use by employers/state and local governments reporting in fiscal year 2018.
Read on for a little more insight into what you can expect.
What Does OPEB Encompass?
Postemployment healthcare benefits, according to GASB 75, includes medical, dental, vision, hearing and other health-related benefits – whether provided separately from or provided through a pension plan. Other forms of post-employment benefits (i.e. death benefits, life insurance, disability, and long-term care) are included when they are provided separately from an employee’s pension plan.
Termination benefits, however, are excluded from GASB 75 reporting.
Get To Know GASB 74 & 75 A Little Better
While GASB 67 and 68 mandated the requirements for the accruals, note disclosures and required supplementary information related to pension information, GASB 74 and 75 are for the Other Postemployment Benefits (OPEB) plan reporting.
The scope of GASB 74 establishes financial reporting standards for state and local governmental OPEB plans that are administered through trusts, which pension plans are implementing this year (2017) for use by state and local governments (i.e. employers) that provide health care (i.e. OPEB) for reporting in fiscal year 2018 (GASB 75).
Similar to GASB 68, GASB 75 will establish requirements for reporting the following:
- Financial Statements
- Your entity’s proportionate share of the plan’s collective net OPEB liability and related deferred outflows and deferred inflows.
- Contributions subsequent to the measurement date.
- Note Disclosures
- Plan Description
- Assumptions and other inputs
- Actuarial valuations
- Projection of benefit payments
- Discount rate
- Required Supplementary Information
- 10 year schedule presenting net OPEB liability and related data.
- 10 year schedule presenting contribution related data.
What’s The Impact At The State & Local Levels?
- Potential for increased costs to prepare your compilation since keeping you in compliance with GASB 75 will require extensive research and calculations in order to properly report GASB 75.
- Summarizing information regarding what healthcare benefits your entity provides to its employees and whether or not it’s through a pension plan
- Gathering data for your entity’s contributions to OPEB plans subsequent to measurement date
- Your financial statements will be restated in FY18
- No impact on your budgeting, accounting records or daily activities – strictly a GAAP entry for financial statements reporting
But in all these new rules and regulations, there is a silver lining. The majority of the information required for recording accruals, disclosure in notes and Required Supplementary Information will be provided by your pension plans as long as the OPEB is funded through one of Ohio’s pension plans.
Seek Accounting Help Now
Back in 2015 when GASB 75 was released, it seemed far enough in the future to table for later. Now that fiscal year 2017 has ended (and calendar year end 2017 is closing in), the implementation of this new reporting requirement is fast approaching. It may reduce administrative burden later to begin thinking about your new processes now. You can do this by beginning to maintain good records of contributions for OPEB.
If you have questions, email Rea & Associates. Myself, or a member of our government services team, is more than happy to assist with any questions or concerns you may have.
By Anita Martin, CPA (Medina office)