GASB 75 – GASB's explanation for how & why the new OPEB Statement was developed
GASB explains why they adopted GASB 75 and the reasoning behind certain choices
As you’re likely aware by now, the Governmental Accounting Standards Board (“GASB”) issued GASB 75 “Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions” in June 2015. This Statement will replace GASB 45 for fiscal years beginning after June 15, 2017. GASB has released a six-page summary that explains the rationale behind the new statement, the feedback they received from stakeholders, and why they made the decisions they did.
While GASB acknowledges that there will be significant implementation costs for covered entities, they believe the “overall costs and benefits of the standards” justify the costs.
The new OPEB standards require enhanced and detailed disclosures comparable to GASB 67/68 for pension plans. While these may meet GASB’s goal of enabling “better informed assessments” regarding the measurement of OPEB liability and expense, we believe GASB missed many opportunities to simplify calculations and disclosures with no material difference in the liabilities that would have been presented in the financial statements. The need for monthly cash flow calculations, blended discount rates, and differing amortization periods for asset, assumptions, and experience variations are just a few examples.
Where do we go from here?
Future GASB 75 white papers from Odyssey will address the various issues awaiting plan sponsors as they begin to review their implementation options. For many, they will find it is beneficial to adopt for FY 17 as their normal biennial GASB 45 valuation will not contain the required GASB 75 disclosures for FY 18.