GASB 74/75 - Other Postemployment Benefit (OPEB) Accounting Changes
The Governmental Accounting Standards Board (GASB) issued two standards that will improve the accounting and financial reporting for OPEB (such things as medical, dental, vision benefits, etc) by both plans and employers:
|Statement No.||Statement Title||Applies To||Effective Date|
|No. 74||Financial Reporting for Postemployment Plans Other Than Pension Plans||Plan financial reports||Fiscal years beginning after June 15, 2016|
|No. 75||Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions||Employer financial reports||Fiscal years beginning after June 15, 2017|
|No. 85||Omnibus 2017||Plan and Employer financial reports||Fiscal years beginning after June 15, 2017|
|Implementation Guide 2017-2||Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans||Plan financial reports||Fiscal years beginning after December 15, 2016|
|Implementation Guide 2017-3||Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (and Certain Issues Related to OPEB Plan Reporting)||Employer financial reports||Fiscal years beginning after June 15, 2017|
Information Available on the GASB Website
The GASB provides a variety of resources designed to support the understanding of these Statements:
Scope and Applicability
Trust: The objective of the GASB Standards is to improve the usefulness of information relating to OPEB included in the external financial reports for making decisions and assessing accountability. The scope includes OPEB plans (defined benefit and defined contribution) administered through trusts that meet the following criteria:
- Contributions from employers and nonemployer contributing entities to the OPEB plan and earnings on those contributions are irrevocable.
- OPEB plan assets are dedicated to providing OPEB to plan members in accordance with the benefit terms.
- OPEB plan assets are legally protected from the creditors of employers, nonemployer contributing entities, and the OPEB plan administrator. If the plan is a defined benefit OPEB plan, plan assets also are legally protected from creditors of the plan members.
Non-Trust: These Standards also include requirements to address financial reporting for assets accumulated for purposes of providing defined benefit OPEB through OPEB plans that are not administered through trusts that meet the specified criteria.
Accounting and Reporting Impact
The primary change is that accounting for OPEB will no longer be based on actuarially required contributions. For accrual basis GAAP statements, employers in multiple-employer, cost-sharing plans (such as DCH) will be required to record a liability and expense equal to their proportionate share of the collective net OPEB liability and expense. The changes do not apply to governmental fund statements that are prepared using a current financial resources focus.
The net OPEB liability will be the difference between the total OPEB liability (the present value of projected benefit payments to employees) and the plan’s fiduciary net position (mostly investments reported at fair value) set aside to pay benefits. The new rules also require employers to present more extensive note disclosures, including descriptive information about the types of benefits provided, how contributions to the OPEB plan are determined, and assumptions and methods used to calculate the OPEB liability. Cost-sharing employers will also present required supplementary information (RSI) schedules with multiple years of information about their proportionate share of the net OPEB liability and their contractually required contributions.
For Georgia, these changes are effective for plan financial statements in fiscal year 2017 and for employer financial statements in fiscal year 2018.