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GASB Issues OPEB Standard

June 15, 2015

The Governmental Accounting Standards Board (GASB) voted on June 2 to issue a new standard that addresses measurement and financial reporting by governmental employers for other postemployment benefits (OPEB). The new Statement No. 75, "Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions," will apply to public colleges and universities in fiscal years beginning after June 15, 2017, which is FY18 for the vast majority of those schools.

Statement No. 75 parallels the pension standard for governmental employers, Statement No. 68, "Accounting and Financial Reporting for Pensions." As such, Statement No. 75 requires employers to report a liability on the face of the financial statements for the OPEB that they provide.

OPEB is composed of all postemployment benefits other than pensions; the benefits are a form of compensation that accrues to employees in exchange for work. The benefits can be paid through a legally separate trust or directly from employers' assets. Statement No. 75 addresses both separate trusts and direct (non-trust) payment plans. Employers' liabilities vary based on the following scenarios:

  • Single employers — Those whose employees are provided with defined benefit OPEB through single-employer OPEB plans. Governments that are responsible only for OPEB liabilities related to their own employees and that provide OPEB through a defined benefit OPEB plan administered through a trust that meets specified criteria will report a net OPEB liability—the difference between the total OPEB liability and assets accumulated in the trust and restricted to making benefit payments.
  • Agent employers — Those whose employees are provided with defined benefit OPEB through agent multiple-employer OPEB plans. Assets in these plans are pooled for investment purposes; separate accounts are maintained for each individual employer so that each employer's share of the pooled assets is legally available to pay the benefits of only its employees. As with single employers, agent employers will report a net OPEB liability that is the difference between the employer's total OPEB liability and its legally separate assets accumulated in the trust and restricted to making benefit payments.
  • Cost-sharing employers — Those whose employees are provided with defined benefit OPEB through cost-sharing multiple-employer OPEB plans. In these plans, the OPEB obligations to the employees of more than one employer are pooled, and plan assets can be used to pay the benefits of the employees of any employer that provides OPEB. Employers that participate in a cost-sharing OPEB plan that is administered through a trust that meets the specified criteria will report a liability equal to their proportionate share of the collective OPEB liability for all entities participating in the cost-sharing plan.
  • Employers who provide OPEB without a separate trust — Those government employers who do not provide OPEB through a trust that meets specified criteria will report the total OPEB liability related to their employees.

A majority of public higher education institutions that offer OPEB to employees participate in multiple-employer cost-sharing OPEB plans. In certain circumstances, non-employer governments can be legally responsible for making some or all of an employer's required OPEB contributions—either to a trust or to employees on behalf of an employer. Some counties, for example, make contributions for community college employers. Such circumstances are known as special funding situations. Although these situations reduce the employer's net OPEB liability, Statement No. 75 requires the non-employer government to recognize a share of the employer government's net OPEB liability in their financial statements.

Statement No. 75 supersedes the requirements of Statements No. 45, "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions" as amended, and No. 57, "OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans," for postemployment benefits other than pensions. Statement No. 75 should be available to download from GASB's website by July 1.

Contact

Sue Menditto
Director, Accounting Policy
202.861.2542
E-mail