Accounting For Other Post Employment Benefits (OPEB)
Under GASB Rule No. 45

Governmental Accounting Standards Board (GASB) Statement No. 45 requires state and local government employers to record other post-employment benefits (OPEB), including retiree health care and life insurance, as an accrued liability rather than an operating expense. As a result, reported long-term OPEB liabilities are increasing dramatically and many governments are taking steps to actively manage them.

The following is an annotated list of case studies, surveys, and reports on GASB 45, OPEB, and plan sponsor strategies for addressing OPEB liabilities.

Case Studies and Surveys

• Berman, E. S. (2006). The Elephant in the Room: Unfunded Public Employee Health Care Benefits and GASB 45. White Paper, 3(32) Pioneer Institute for Public Policy Research.
  Examines GASB 45’s impact on state and local governments in terms of budgets, operations and bond ratings, and presents brief case studies on changes nine governments have made.
• Center on Budget and Policy Priorities. (2008, Mar. 11). Accounting for the Cost of Retiree Health and Other Benefits (GASB45) Washington, DC: Center on Budget and Policy Priorities.
  Outlines the effects of GASB 45 and spotlights five state governments and their decisions.
• Coggburn, J. D., Daley, D. M. and Kearney, R. C. (2008, Mar) Public Sector Retiree Health Care Benefits: A View from the American States Paper presented at the annual meeting of the WESTERN POLITICAL SCIENCE ASSOCIATION, Manchester Hyatt, San Diego, California School of Public and International Affairs at North Carolina State University in conjunction with the Center for State and Local Government Excellence.
  Reports preliminary findings of a study on states’ retiree health care benefits, including measures being considered or adopted to deal with retiree health care costs.
• Fitch Ratings. (2007, Mar. 22). Old Promises, Emerging Bills: Considering OPEB in Public Finance Ratings. New York, NY: Fitch, Inc.
  Discusses how unfunded OPEB liabilities can affect credit ratings and gives examples of cities, states, and counties that have begun to pre-fund their OPEB obligations.
• Government Finance Officers Association (GFOA).OPEB Toolkit
  Presents a collection of case studies, presentations, and templates designed to help government officials manage their OPEB challenges.
• The Pew Charitable Trusts, The Pew Center on the States. (December 18, 2007). Promises with a Price: Public Sector Retirement Benefits. Washington, D.C.: The Pew Charitable Trusts.
  Summarizes factors determining the costs of pensions and other post-employment benefits (OPEB) and how states are addressing these obligations.
• Public Employee Post-Employment Benefits Commission. (2008). Funding Pensions & Retiree Health Care for Public Employees CA: PEBCA.
  Presents case studies of various cities, counties, and special districts in California and provides recommendations for addressing retiree health care funding.
• Sanford, Dr. Paula. National Center for the Study of Counties. (2007, Dec.).The Implementation of GASB 45: Case Studies of 15 Counties GA: Carl Vinson Institute of Government.
  Discusses challenges posed by GASB 45 and how 15 counties are working to overcome them.
• Standard and Poor’s. (2007, Nov. 12). U.S. States are Quantifying OPEB Liabilities and Developing Funding Strategies as the GASB Deadline Nears. New York: McGraw-Hill Companies.
  Outlines states’ strategies for managing OPEB liabilities.

Reports

• Brady, Steffanie. New England Public Policy Center. (2007). Other Post- Employment Benefit Promises: The Fog is Clearing. Boston, MA: New England Public Policy Center at the Federal Reserve Bank of Boston.
  Presents an overview of GASB 45 and outlines difficulties with its implementation.
• Cauchi, Richard. National Conference of State Legislatures Health Program. (2008, Apr. 24).State Employee Health Benefits Denver, CO: National Conference of State Legislatures.
  Lists modifications to states’ health benefit policies over the past four years.
• Clark, Robert L. Center for State and Local Government Excellence. (2008, July). Financing Retiree Health Care: Assessing GASB 45 Estimates of Liabilities. Washington, DC: Center for State and Local Government Excellence.
  Analyzes the key assumptions actuaries use to estimate a government’s retiree health costs.
• Clark, Robert L. Center for State and Local Government Excellence. (2008, July). The Crisis in State and Local Government Retiree Health Benefit Plans: Myths and Realities. Washington, DC: Center for State and Local Government Excellence.
  Examines the current financial status of state retiree health plans.
• Feldman, M. & Haynes, R. (2007, Mar.). Effect of New GASB 45 Accounting Rules: What We Can Learn From FAS 106. Benefits & Compensation Digest, 44, 18-21.
  Considers the approaches taken by corporations in dealing with FAS 106 in providing recommendations for implementing GASB 45.
• Fleet, S. (2007, Aug.). GASB 45 Words of Wisdom: Don’t Just Stand There--Do Something! Employee Benefit Plan Review, 62, 18-20.
  Discusses the pros and cons of five different approaches to GASB 45.
• Franzel, J. M. “Trains on a Collision Course: The Local Government Employee and their Retirement Health Care Benefits.” Center for State and Local Government Excellence, Dallas TX. 8 Mar. 2008. Presented at The American Society for Public Administration Annual Conference.
  Discusses the implications of local government employee demographic trends and new governmental accounting standards in offering a perspective on the future of retiree health care.
• Governmental Accounting Standards Board. Summary of State No.45: Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions. Washington, June 2004.
  Provides a summary of statement No. 45, as well as the reasoning behind its creation.
• Hewitt Associates. (2006, Nov.). The Retiree Health Care Challenge. Presented at the Symposium for the TIAA-Cref Institute – Seeking Remedies to the Retiree Health Care Challenge
  Details the various aspects of health benefit plan design and funding decisions when attempting to strategically meet post-employment healthcare obligations.
• Keating, E. & Berman, E. (2007, Sept.). Unfunded Public Employee Health Care Benefits and GASB 45. Accounting Horizons, 21(3), 245-263.
  Summarizes the unfunded liabilities reported by states and major cities and suggests measures for assessing the ability of these entities to address these costs.
• Kelley, A. G. & Ruggieri, M. P. (2007). Municipalities Get a Healthy Dose of Reality on Postemployment Benefits: The Effects of GASB43 and 45 on Government Finances. The CPA Journal, p. 28-36. Retrieved May 29, 2007, from Publication of the New York State Society of CPAs
  Focuses on how GASB 43 and 45 have forced governments to re-evaluate their management of OPEB liabilities and discusses the Statements’ impact on credit ratings.
• Murphy, B. & Zorn, P. (2006, May). Managing the Impact of GASB 45. Benefits & Compensation Digest, 43
  Outlines GASB’s OPEB requirements, details various funding mechanisms, and offers strategies for compliance.
• Perlstadt, H.; Schneider, A. & Kelly, R. K.. (2008, July). Center for State and Local Government Excellence. Balancing Dollars and Health Sense. Washington, DC: Center for State and Local Government Excellence.
  Discusses the complexities involved in funding governmental retiree heath benefits and provides recommendations on alternative solutions.
• Thoen, F. & Wade, D. (2008). Living with GASB 45: How to Manage Liabilities Associated with Retiree Medical Benefits. Benefits Quarterly, 24, 39-45.
  Offers solutions for employers desiring to reduce liabilities without eliminating benefits plans.
• U.S. General Accountability Office (GAO). (2008, Jan.). State and Local Government Retiree Benefits: Current Funded Status of Pension and Health Benefit. Washington, D.C.: Government Printing Office. (GAO-08-223).
  Discusses OPEB funding levels of state and local governments by focusing on governments’ annual contributions, the ratio of assets to actuarially accrued liabilities, and the size of unfunded liabilities.
• U.S. General Accountability Office (GAO). (2007). State and Local Government Retiree Benefits: Current Status of Benefit Structures, Protections, and Fiscal Outlook for Funding Future Costs. Washington, D.C.: Government Printing Office. (GAO-07-1156)
  Investigates how retiree benefits offered by state and local governments are provided, managed, and protected, and considers what actions governments are taking to meet their future obligations.
• Zion, D. & Amit, V. Credit Suisse Securities, LLC. (2007, Mar. 22).You Dropped a Bomb on Me, GASB Credit Suisse Securities, LLC.
  Discusses the effects of GASB 45 and how state and local governments will likely respond.