The Wall Street Journal recently published an article about the impact of GASB 75 on municipal balance sheets . The estimated nationwide impact will be a $645 billion increase in balance sheet liabilities.
The increased attention that GASB 75 brings to Other Post-Employment Benefits (“OPEB”) will lead to increased pressure on municipalities across the country to manage OPEB liabilities. The state of Michigan has already started to reduce benefits by shutting off retiree medical benefits to new hires and have further reduced liabilities by $20 billion since 2012 by pre-funding these benefits. Municipalities around the country are feeling more pressure to manage costs and/or pre-fund their OPEB benefits. According to the article 57% of municipalities surveyed said they were somewhat or very likely to reduce benefits in response to GASB 75 standards.
The bad news is that GASB 75 is coming and there’s nothing we can do to stop it. The good news is you’re not in this alone – Odyssey is here to keep you updated on everything GASB 75 and OPEB related. And of course, if you have any questions on these upcoming changes, contact me or your Odyssey consultant and we’ll do our best to answer.