June 2, 2016

A new set of local government reporting requirements relative to liabilities for “other post-employment benefits” (OPEB), issued by the Governmental Accounting Standards Board, are taking effect for fiscal 2018.
 
Statement 75, Accounting and Financial Reporting for Post-employment Benefits Other Than Pensions, will replace statements 45 and 57, effective June 15, 2017, and Statement 74, Financial Reporting for Post-employment Benefit Plans Other Than Pension Plans, will replace Statement 43.
 
The changes have three main purposes, according to GASB.
 
• The changes are intended to better align OPEB reporting with pension reporting, and are nearly identical to GASB statements 67 and 68 for pensions.
 
• Statement 75 is intended to “establish standards for recognizing and measuring liabilities, deferred outflows of resources, and expense/expenditures.” Municipal OPEB liability will now be up front on the balance sheet, to make it more transparent and to improve understanding of the scope of the liability.
 
• The statements address funding from the perspective of accounting for money set aside for OPEB. Statement 74 provides guidelines for OPEB trust funds, including how contributions are made and the legal protections surrounding the plans. The statements discuss parameters for an OPEB trust, for communities that are setting aside money for their liability, but do not address whether public employers should pre-fund.
 
Both statements are effective for fiscal 2018.

posted by Jeff Bennett