LEOFF 1 Retiree Medical Cost Study Nears Completion

The state budget adopted last April included funding for the Office of the State Actuary to conduct an actuarial study of local government liabilities for Law Enforcement Officers’ and Fire Fighters’ Retirement System Plan 1 (LEOFF 1) post-retirement medical benefits. The results of that study will be presented to the Select Committee on Pension Policy (SCPP) on Tuesday, December 18. We expect the study to be available on the Actuary’s website, http://osa.leg.wa.gov, after that meeting.

It is important to note that this study will summarize the state-wide liabilities and is not intended to satisfy individual LEOFF 1 employer responsibilities to report their LEOFF 1 liabilities for GASB 45 purposes.

However, the State Actuary is also developing an on-line tool that will help smaller jurisdictions (those with fewer than 100 LEOFF 1 actives and retirees) determine their individual liability. This tool should be available on the Actuary’s website in early 2008.

Phase 1 GASB 45 Reporting Begins Soon

Issued by the Government Accounting Standards Board, Statement 45 (GASB 45) mandates that public employers begin accounting for non-pension retirement benefits known as "OPEB" (Other Post Employment Benefits) on their financial statements. OPEB includes retiree healthcare coverage, life insurance, and long-term care.

Phase 1 of GASB 45 implementation is fast approaching. Phase 1 employers – those with 1999 revenues of $100 million or more – must implement GASB 45 in financial statements for periods beginning after December 15, 2006 – so in May of 2008, for the fiscal year January 1, 2007 through December 31, 2007. Jurisdictions with between $10 million and $100 million in 1999 revenues have an additional year before they must report, and those with less than $10 million in revenues have two more years.

In preparation for phase 1 implementation, the State Auditor’s Office is in the process of updating the BARS manual (which prescribes accounting, budgeting and reporting requirements for all local governments) with information regarding OPEB and GASB 45. Only those jurisdictions that report using Generally Accepted Accounting Principles (GAAP) must report under GASB 45. Jurisdictions that report on a cash basis or on a regulatory basis of accounting prescribed by the State Auditor will not need to comply with GASB 45 reporting requirements.

GASB 45 requires jurisdictions with OPEB plans with over 100 members to have an actuarial valuation performed by an actuary. Employers with plans with fewer than 100 members have the option to use an alternative measurement method to calculate their OPEB liability. It is expected that the tool being developed by the State Actuary will allow smaller LEOFF 1 employers to calculate OPEB costs and satisfy the requirements of the alternative measurement method.

 
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