Governmental Accounting Standards Board Statement Number 45 (GASB 45)

GASB 45, Accounting and Financial Reporting by Employers for Post Employment Benefits Other Than Pensions, dramatically changes the way state and local governments report the future obligation for Other Post Employment Benefits (OPEBs). GASB 45 changes reporting on financial statements from a cash basis to an accrual basis. These previously unrecorded liabilities are estimated at a staggering $1.5 Trillion.

  • Requirements for Financial Disclosure will be phased in over fiscal Years ending in 2008 – 2010 by entity size
    • Annual Revenues over $100 Million
    • Annual Revenues between $10 and $100 Million
    • Annual Revenues less than $10 Million
  • Public employers must report the annual cost of their retiree medical, life insurance and other non-pension benefits in the same way they report annual pension costs
  • Actuarial Valuations will be required every 2 years for employers with more than 200 employees/retirees and every 3 years for those with less than 200

Facing up to these obligations will force covered employers, in order to maintain solid financial statements and reasonable bonding ratings, to:

  • Begin funding the obligation and/or,
  • Shrink the obligation, or
  • Stick their heads in the sand and ignore the obligation.

Bonding requirements are significantly reduced by partially funding the obligation. Due to the technically complexity of this requirement, most covered employers will seek professional assistance in the following areas:

  • Actuarial Services to quantify the obligation
  • Consulting Services to help determine a strategy
  • Investment Advisory Services for funding
  • Trust and Custodial Services
  • Legal and Compliance Assistance
  • HRA Administration to fund the obligation

Tri-Star has developed a comprehensive solution to provide employers with any or all of these services.

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