GASB 45 Deadlines Draw Closer

GASB 45 Deadlines Draw Closer

In just one year, larger jurisdictions – those with annual revenues of more than $100 million – must comply with the accounting standard known as "GASB 45." Smaller jurisdictions have a little more time: December 15, 2007 is the deadline for public entities with revenues between $10 million and $100 million, and those with less than $10 million in revenues must comply by December 15, 2008.

Issued by the Government Accounting Standard Board, GASB 45 will require public agencies to account for their future liability for retiree health care and other post employment benefits (OPEB) in their financial statements. In our state, this will have a significant impact on all cities, counties, and fire districts that are responsible for the health and long-term care benefits of LEOFF 1 retirees.

Most governments account for their LEOFF 1 medical costs on a "pay-as-you-go" basis, only recording on their financial statements the cost of benefits actually paid in that year. Under the new rule, employers will now have to recognize the expense over the working lifetimes of their employees.

Many public agencies will need assistance from qualified actuaries to determine their future liabilities for these benefits. As we’ve mentioned before, AWC is working with the State Actuary, who has indicated that his office may be able to help individual jurisdictions identify their liability. We’ll keep you posted.

For more information and to see how this impending requirement is playing out in other states and cities, read this article in the New York Times entitled "The Next Retirement Time Bomb."

The Government Accounting Standards Board provides additional information, including a fact sheet with frequently asked questions, on their website. Go to http://www.gasb.org/, click on Project Pages, then on Other Postemployment Benefits.

 
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