GASB Rules Require States to Record Future Retiree Benefits

Maryland, one of 41 states that provide some health insurance for retirees, and one of 30 that record these costs on a pay-as-you-go basis, may have to direct its current budget surplus to fund health care benefits for future retirees, the Associated Press reports. The Government Accounting Standards Board’s (GASB) statements 43, Reporting for Postemployment Benefit Plans Other Than Pension Plans and 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other that Pensions, will require government entities to record Other Post-employment Benefits (OPEB) as accrued liabilities, similar to pension plans, according to the Economist.


Click Here

Warren Deschenaux, the Maryland legislature’s chief fiscal adviser, said that the hit may not be as great as some people fear. He says that Maryland just needs to keep pace with other AAA-rated states, the AP reports.

The new rules make the costs of retiree-health obligations clearer, Karl Johnson of the GASB told the Economist. “These costs were always there,” he says. “They just weren’t disclosed and often were not measured.”

The private sector has had similar rules since 1992, the Economist reports, but the costs to governments are likely to be higher. Public sector employers are more likely to provide health care benefits and the benefits are usually more generous.

The annual OPEB costs will be based on actuarial valuations, and failure to adhere to the GASB statements can affect bond ratings and the quality of audits, the Economist says

The GASB has issued an Implementation Guide to Statements 43 and 45 that answers questions about actuarial issues, insurance rate subsidies and definitions of OPEB benefits, according to a press release. The statements will be implemented over three years with implementation for Statement 43 beginning December 15, 2005. Implementation of Statement 45 begins on December 15, 2006.

You may like these other stories...

Savvy tax planning is about more than knowing what to write off. Just as essential is knowing when to take deductions. Choosing to stuff deductions into one tax year as opposed to another bears directly on how much winds up...
Tesco says it overstated profit forecastStanley Reed of the New York Times reported that Tesco, the large British grocery retailer, disclosed on Monday that it had overstated its expected half-year profit by about $400...
The IRS has announced the special per diem rates for 2014-15 that taxpayers can use for substantiating the amount of ordinary and necessary business expenses incurred while traveling away from home. The new per diem rates...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.