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GASB

Governmental Accounting Standards Board Statement Overview

In June 2012, the Governmental Accounting Standards Board (GASB) released two new standards relating to pension accounting and financial reporting for state and local governments. These changes were intended to improve pension information and increase the transparency, consistency and comparability of pension information across governments. The standards do not address how a government should go about funding the plans.

In June 2015, the Governmental Accounting Standards Board (GASB) released two new standards relating to other postemployment benefit accounting and financial reporting for state and local governments. These changes were intended to improve other postemployment benefit information and increase the transparency, consistency and comparability of pension information across governments. The standards do not address how a government should go about funding the plans.

The new standards will not affect or alter how public pensions are funded or how your contribution rates are calculated.

Statement No. 67 - Financial Reporting for Pension Plans 

Governmental Accounting Standards Board (GASB) - Statement No.67, Financial Reporting for Pension Plans, defines the way public pension plans calculate and report the Net Pension Liability. It is effective for pension systems (FPPA is the pension system) with fiscal years beginning after June 15, 2013. FPPA will implement this standard in the fiscal year ending December 31, 2014.

This Statement replaces the requirements under GASB Statement No. 25, Financial Reporting for Defined Benefit Plans and Note Disclosures for Defined Contribution Plans, and Statement No. 50, Pension Disclosure, as they relate to pension plans that are administered through trusts. 

Statement No. 67 provides guidance to pension plans that are administered through trusts or similar arrangements, increases the amount of information added to financial statements (note disclosures), and requires new required supplementary information (RSI) schedules for both defined benefit and defined contribution pension plans.

FPPA implemented this standard in the fiscal year ending December 31, 2014. For more information on Statement No. 67, visit the GASB website.

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Statement No. 68 - Accounting and Financial Reporting for Pensions 

GASB Statement No. 68, Accounting and Financial Reporting for Pensions, affects the financial statements of FPPA’s employers. Our participating employers implemented this standard in the fiscal year ending December 31, 2015.

We know complying with these new standards may be complex. FPPA is committed to helping our participating employers learn as much as possible about these accounting standards.

You should also consult with your own accountant or independent auditor about the implementation of these new standards into your financial statements.  It is important to note that FPPA will not be able to provide you direct assistance on how to report this information within your financial statements.

About GASB 68

Governmental Accounting Standards Board (GASB) - Statement No.68, Accounting and Financial Reporting for Pensions, requires employers participating in the plans to report expanded information concerning pensions in their financial statements, as well as their proportionate share of the Net Pension Liability effective for fiscal years beginning after June 15, 2014.

This statement replaces the requirements under GASB Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, and Statement No. 50, Pension Disclosures. Statement No. 68 significantly changes employer reporting of pension assets and liabilities at the entity-wide and enterprise-fund level. 

Previously, employers were only required to record a pension liability or asset when they did not make the required annual contribution (liability) or made a contribution in excess of the required annual contribution (asset) to the plan. However, this pension standard requires immediate recognition of the net long-term liability of future pension benefits in excess of accumulated plan assets.  This Statement applies to pension reporting for the sponsoring state or local governmental entity, and is effective for fiscal years beginning after June 15, 2014. Employers with a fiscal year ending of December 31 implemented this standard in the fiscal year ending December 31, 2015.

Distinctions are made regarding the particular requirements depending upon the type of pension plan administered, as follows:

  • Agent multiple-employer pension plans: those in which plan assets are pooled for investment purposes but 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.
  • Cost-sharing multiple-employer pension plans: those in which the pension 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 pensions through the pension plan.

FPPA administers cost-sharing multiple-employer pension plans (Statewide Retirement Plan with 252 employer departments), a single-employer plan (Colorado Springs New Hire Plan) as well as agent multiple-employer pension plans (50 old hire plans and 174 volunteer firefighter plans). The Statewide Death & Disability Plan has been determined to report under other postemployment benefit plan guidance.

The biggest change affects a local government’s net pension liability (NPL) — often called an unfunded actuarial accrued liability (UAAL). This is the difference between what a local government or special district owes for its pension and the assets that have been accumulated towards that pension’s liability. 

In the past, the unfunded liability was disclosed in the notes of the financial statements, and as long as your local government/special district made its required annual contributions, there was no liability reported on the balance sheet. This standard has the NPL on the local government/special district’s financial statement balance sheet and requires recognition of the expense. It also requires restating the beginning balance sheet liability for the year of implementation and restating deferred inflows/outflows of resources.

For more information on Statement No. 68, visit the GASB website.

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Statement No. 74 - Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans 

This establishes new accounting and financial reporting requirements for OPEB plans (FPPA is the OPEB plan). This statement is effective for fiscal years beginning after June 15, 2016. FPPA implemented this standard in the fiscal year ending December 31, 2017.

This Statement replaces Statements No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended, and No. 57, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans. It also includes requirements for defined contribution OPEB plans that replace the requirements for those OPEB plans in Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans - as amended, Statement 43, and Statement No. 50, Pension Disclosures.

The scope of this Statement includes OPEB plans - defined benefit and defined contribution - administered through trusts that meet specified criteria. This Statement also includes 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. This statement increases the amount of information added to the financial statements (note disclosures), and requires new required supplementary information (RSI) schedules for both defined benefit and defined contribution OPEB plans.

FPPA implemented this standard in the fiscal year ending December 31, 2017.

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Statement No. 75 - Accounting and Financial Reporting for Postemployment Benefit Other Than Pension 

This statement requires state and local government employers participating in and providing OPEB benefits to their employees to report expanded information regarding these OPEB plans in their financial statements. This statement is effective for fiscal years beginning after June 15, 2017.

This Statement replaces 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 OPEB. Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, establishes new accounting and financial reporting requirements for OPEB plans.

This Statement is intended to improve information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. This Standard establishes standards for recognizing and measuring liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures. For defined benefit OPEB, this Statement identifies the methods and assumptions that are required to be used to project benefit payments, discount projected benefit payments to their actuarial present value, and attribute that present value to periods of employee service. Note disclosure and required supplementary information requirements about defined benefit OPEB also are addressed.

Employers participating in the FPPA Statewide Death & Disability Plan should review this Memo regarding the application of Statement No. 75.

For more information on these statements, visit the GASB website.

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 All summaries, materials, information, etc. provided in this GASB Guide are in reference to FPPA administered plans. Employers may have plans separate from FPPA to which these standards apply. In that case, the Employer may have different implementation requirements acting as both the Plan and Employer entity.

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