Systematic process makes accounting for OPEB less daunting

Just as smaller cities were wrapping up the GASB 34 implementation, the Government Accounting Standards Board (GASB) introduced two more high-impact statements:  GASB 43 & 45, which require cities and other government entities to report and accrue costs for retiree health benefits, just as they do for pension plans and other long-term liabilities.

While accounting for post-employment benefits (OPEB) is the right thing to do, it can be a daunting task for your already over-burdened staff.  KDV’s GASB experts can help.  We’ll walk you through a systematic process for measuring and accruing OPEB costs (Statement 45), as well as reporting them (Statement 43):

Step One:  Determine if a liability exists
We’ll help you collect the raw data, including eligible employees and benefits.

Step Two:  Determine the amount of the liability
We can recommend an experienced actuary to conduct a valuation as prescribed by the GASB rulings.

Step Three:  Review your existing OPEBs for potential cost controls and savings
You may get pressure to cut retirement benefits as a way to reduce the liability, which is usually substantial.  We can outline ways to reduce costs and still maintain the kind of benefits you need to satisfy collective bargaining obligations and attract highly qualified staff.

Step Four:  Examine funding options and their effect on your financial position
The most common funding vehicle is a trust, but you may be able to issue obligation bonds.  We can develop “what-if” scenarios for each option to identify the impact on cash flow and your borrowing capabilities, so you can choose the most appropriate funding vehicle.

Step Five:  Accurately report your plan information
We’ll prepare your report as required, with a Statement of Plan Net Assets, Statement of Changes in Plan Net Assets and required notes and supplementary information.  Then we’ll sit down and explain it to you, so that you’re prepared to file reports on an on-going basis.

For more information on GASB 43 & 45, contact one of our government experts or call 763.537.3011.