GASB Statement No. 75 – What Basics Do I Need To Know?
by Christopher W. Heinfeld, CPA, Audit Partner
Posted on August 8, 2018
First, some general information. GASB Statement No. 75 (Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions) is accompanied by GASB Statement No. 74 (Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans); GASB Statement No. 74 relates to the plans of other postemployment benefits, whereas GASB Statement No. 75 relates to the participating entities of those other postemployment benefit plans. GASB Statement No. 74 was effective for plans with fiscal years beginning after June 15, 2016 and GASB Statement No. 75 will be effective for participating entities with fiscal years beginning after June 15, 2017. Lastly, these two statements for other postemployment benefits (OPEB) are very similar to those of GASB Statements No. 67 and No. 68, which were for pensions.
Now, let’s discuss some of the related requirements; specifically, for plans that are administered through a trust that meets the specified criteria. As previously mentioned, GASB Statement No. 75 is very similar to that of GASB Statement No. 68, which was related to pensions. The requirements for the valuation of the total OPEB liability, as well as the measurement of the net OPEB liability, are very comparable. Additionally, the presentation of the related OPEB account balances (net OPEB liability, deferred outflows and inflows of resources, and OPEB expense) mirror those required by GASB Statement No. 68 for pensions. Lastly, the note disclosures and required supplementary information (RSI) requirements are equivalent to those of GASB Statement No. 68; see below for further details.
The note disclosure requirements vary based on the type of plan, but generally, comprise:
- a description of the plan including information about benefits and contributions
- information about the assumptions and other inputs used in the valuation
- information about the measurement of the liability including sensitivity analysis over not just the discount rate but also the healthcare cost trend rate used
- information about the plan’s basic financial statements or a reference to the report
- changes in the net OPEB liability (single/agent plans only), and
- the proportionate share of collective net OPEB liability (cost-sharing plans only)
If GASB Statement No. 68 was effective for your entity, then you will probably notice that these are the same general requirements, with the exception of additional information necessary for disclosure of any healthcare cost trend rates (if applicable) used in the valuation and measurement of the liability.
The RSI requirements vary based on the type of the plan, but generally, comprise a schedule of contributions, a schedule of changes in net OPEB liability and related ratios (single/agent plans only), and a schedule of proportionate share of the net OPEB liability (cost-sharing plans only). If GASB Statement No. 68 was effective for your entity, then you will probably notice that these are the same schedules required under that statement; however, be aware that GASB Statement No. 85 (Omnibus) made some adjustments to the use of Covered-Employee Payroll versus Covered Payroll.
Lastly, as this statement requires a significant amount of information to be disclosed, if your entity participates in an OPEB plan under the same organization as your pension plan, you may want to consider referencing both plans for identical disclosures rather than doubling up on disclosures and information.