A one-page comparison of GASB 43/45 and the new GASB 74/75 accounting rules for Other Post-Employment Benefits (OPEB)

1. 12/28/2017
GASB 74/75 At-A-Glance
Governmental Accounting Standards Board (GASB) statements 74 and 75 significantly reform Other Post-
Employment Benefits (OPEB) financial reporting. Public employers should prepare now for the new accounting
rules, which take effect in FY2017 (GASB 74 plan accounting) and FY2018 (GASB 75 employer accounting).
Current GASB 43/45 Rules New GASB 74/75 Rules
 The balance sheet liability is the Net OPEB
Obligation: the cumulative difference between
the Annual Required Contribution (ARC) and
employer contributions.
 The entire unfunded accrued liability goes on the
face of the financial statements.
 The discount rate is based on the plan assets’
expected investment return if the employer’s
funding policy is to consistently contribute at
least the ARC.
 The discount rate is based on a projection of how
long current irrevocable trust assets and future
contributions will cover current plan members’
future benefit payments (cross-over calculation).
 Unfunded plans and those with revocable OPEB
trusts must use a municipal bond index rate as
their discount rate.
 Actuarial reports are required every 2 to 3 years,
depending on employer size.
 All employers require an actuarial report every 2
years. In the “off-year”, a simplified report will
also be needed in order to reflect assumption and
asset changes.
 The ARC is often used as a de-facto funding
policy even though it is not intended to be one.
 Goodbye ARC! Funding and accounting are
officially separated. Employers who pre-fund their
OPEB will need to develop their own funding
policies and Actuarially Determined Contribution
(ADC).
In addition to the changes above, GASB 74/75 will introduce many other reporting requirements, including:
 Enhanced disclosures of historical contributions, funded status, and basis for assumptions
 Disclosure of the Net OPEB Liability’s sensitivity to changes in medical trend and discount rate (+/- 1%)
 Biennial actuarial reporting for all plans; including updated calculations in the “off-years”
Employers should start preparing now by reviewing current OPEB promises and considering strategies to pre-
fund these liabilities. We recommend the following process:
Educate yourself
and other
stakeholders
Model the effect
on your plan
Consider changes
to plan and
funding policy