GASB Hits the Bottom Line
New accounting standards for recognizing public agency unfunded health and welfare liabilities for retirees become effective this year. Instead of disclosing the net liability as a note, Governmental Accounting Standards Board (GASB) standards will require the net retiree liability take its place as a line item expense on the financial statement. This applies to financial statements for fiscal years beginning after June 15, 2016, so most California public agencies will have an effective date of July 1, 2016. For many entities, unfunded retiree health and welfare benefits spell an instant deficit at the bottom line.
We previously outlined the new GASB standards in a Briefing that provides the more technical details. Among of the challenges we can expect to encounter include more rigorous auditing processes and scheduling of actuarial valuations; credit impacts affecting bond ratings and educational accreditation; and greater public concern and media coverage over these liabilities.
Keenan recently hosted two webinars to assist California schools and public agencies to understand the new GASB requirements, strategic considerations and approaches for mitigating their liabilities. Geoff Kischuk, FSA, President of Total Compensation Services, Inc. provided his expertise on the schools/community colleges webinar, while Mary Beth Redding, Vice President and Actuary from Bartel Associates, LLC, presented the session oriented to cities, counties and special districts. If you weren’t able to join the webinar live, or if you would like to view it again, please click the image below to see the recordings and download the presentation slides:
We want to help everyone stay informed on this important issue as it affects us all – whether we work for a public agency or live in a community served by a local government or public education agency.
About Gail Beal
Gail Beal is Senior Vice President, Keenan Financial Services and works with public agencies throughout California, advising on retirement planning programs.