GASB Issues Preliminary Views on Pension Standards
July 16, 2010
The Governmental Accounting Standards Board (GASB) has issued a Preliminary Views (PV) on fundamental issues related to recognition and measurement of pension obligations by state and local government employers. Titled "Pension Accounting and Financial Reporting By Employers," the PV is an extra step in GASB's standard setting process that allows comments before development of a more detailed accounting standard proposal.
The PV, part of the Board's overall project to improve existing accounting standards for postemployment benefits, introduces recognition and measurement standards to help readers of financial statements understand the future value of the current promise to provide pension benefits to current and past employees. The approach presented in the PV would move governmental pension accounting and reporting away from the current funding orientation.
Although funding is considered a government policy decision, funding decisions can influence a government's pension liability. When employees are promised pension benefits, the future benefit is earned in exchange for work performed. Once those benefits have been earned, a government has a current obligation to pay them in the future. Most governments attempt to meet that obligation by annually contributing to a pension plan, thereby accumulating resources to pay for the pension benefits when they come due in the future.
According to the GASB's preliminary view, the employer is primarily responsible for the portion of the pension obligation not covered by assets in the pension plan-in other words, the unfunded obligation. Furthermore, that unfunded obligation is a liability of the employer, referred to as a net pension liability.
The GASB offers several resources -including an article, fact sheet, and video presentation-to assist users of financial statements who wish to comment on the Preliminary Views. Comments are due to GASB on September 17, 2010. Public institutions are encouraged to comment directly to GASB or send comments to NACUBO for inclusion in the industry comment letter.
The GASB will host several public hearings on the Preliminary Views:
- October 13, 8:30 a.m. (Central Time), in Dallas, Texas
- October 14, 8:30 a.m. (Pacific Time), in San Francisco, California
- October 27, 8:30 a.m. (Eastern Time), in New York City.
More details, and instructions for registering to participate in the hearings, will be announced in the coming weeks on the GASB website.
Director, Accounting Policy
- ED Provides Guidance and Proposes New Forms for Perkins Loans
- GASB Issues Proposal on Split-Interest Agreements
- ED Advances Plans for New Student Loan Repayment Option
- 2015 CAO and CBO Collaborations
August 3-4, 2015
- 2015 Planning and Budgeting Forum
September 28-29, 2015
- 2015 Tax Forum
October 25-27, 2015
- WEBCAST: Developing Your Campus Distance Learning Strategy
Wednesday, August 12, 2015 1:00PM ET
- WEBCAST: Legislative Lunchcast: A 30-Minute Washington Update from NACUBO
Wednesday, September 9, 2015 12:00PM ET
- ON-DEMAND: A Just-in-Time Webcast to Explain FASB’s NFP Reporting Proposal
- ON-DEMAND: Decoding ED's Cash Management Proposal
- ON-DEMAND: Corporate Sponsorships: Getting it Right
- ON-DEMAND: Analytics that Support Planning, Budgeting, and Results
- A Guide to College and University Budgeting: Foundations for Institutional Effectiveness, 4th ed. - by Larry Goldstein
- NACUBO's Guide to Unitizing Investment Pools - by Mary S. Wheeler
- Managing and Collecting Student Accounts and Loans - by David R. Glezerman and Dennis DeSantis