Category Archives: Public employers

Implementing GASB 75 rules

In 2016, new Governmental Accounting Standards Board (GASB) rules were implemented for postemployment benefits other than pensions (OPEB). Other rules are scheduled to go into effect this year.

Successful implementation of the new rules requires an understanding of various technical concepts related to newly required calculations. In this PERiScope article, Milliman’s Tim Herman discusses the allocation of financial reporting liabilities and expenses for cost-sharing multiple-employer OPEB plans under GASB 75.

This article is part of Milliman’s Governmental Accounting Standards Board (GASB) 73/74/75 series.

Public pension funding status inches back down in Q4 as asset returns fall short of benchmark

Milliman today released the fourth quarter results of its Public Pension Funding Index (PPFI), which consists of the nation’s 100 largest public defined benefit (DB) pension plans. By December 31, 2016, the funded ratio of these plans had fallen to 70.1%, down from 71.0% at the end of September. The funded status declined by $54 billion, the result of modest investment returns for the fourth quarter that fell short of the quarterly benchmark.

The robust market performance seen post-election helped moderate the losses suffered in October, with Q4 investment returns of about 0.45% in aggregate for the quarter. If the recent surge in the equity market holds up and interest rates remain stable, the returns in 2017 Q1 should be much more promising.

The Milliman 100 PPFI total pension liability (TPL) increased from $4.620 trillion at the end of Q3 to an estimated $4.659 trillion at the end of Q4. The TPL is expected to grow modestly over time as interest on the TPL and the accrual of new benefits outpaces the benefits paid to retirees.

To view the Milliman 100 Public Pension Funding Index, click here. To receive regular updates of Milliman’s pension funding analysis, email us.

GASB 74/75: Impact on small government employers

The Alternative Measurement Method (AMM) allows small government employers to use a modified approach to calculate their postemployment benefits other than pensions liabilities. In this article, Milliman consultant Joanne Fontana reviews the AMM, which is used by small government employers in lieu of an actuarial valuation. It also discusses the important changes relevant to small government employers as Governmental Accounting Standards Board (GASB) Statements No. 74 and 75 takes effect.

GASB 73: Implementation and overview

GASB Statement 73 is for accounting and financial reporting for pensions not within the scope of GASB Statement 68, and applies for employer fiscal years beginning after June 15, 2016. GASB 73 applies to retirement plans (both defined benefit and defined contribution) that either do not have any dedicated assets associated with them or have assets that are not in a trust meeting certain requirements. With no assets in an irrevocable trust, the entire total pension liability is shown on the employer’s balance sheet under GASB 73.

Implementation of GASB 73 will result in required enhancements to financial statement disclosures by establishing a single framework for the presentation of information about pensions, which will enhance the comparability of pension-related information reported by employer and non-employer contributing entities. Milliman’s Jack Chmielewski provides perspective in this PERiScope article.

GASB 74/75: Depletion date projections

In this article, Milliman’s William Winningham discusses the determination of an OPEB plan’s depletion date, which is the projected point in the future (if any) when plan assets are no longer sufficient to satisfy benefit obligations. He also talks about the impact on liability calculations that would result from a conclusion that a depletion date exists.

This article is part of Milliman’s Governmental Accounting Standards Board (GASB) 73/74/75 series.

GASB 73/74/75: Timing considerations for compliance with new financial reporting rules

Governmental Accounting Standards Board (GASB) Statements 74 and 75 mandate changes to the way liabilities are reported on financial statements for state and local governments with other postemployment benefits (OPEB) obligations. These changes are designed to standardize the way OPEB expense is calculated and displayed in order to enhance disclosure and facilitate decision-making. There are several important dates to consider when calculating and reporting OPEB liability: the reporting date, actuarial valuation rate, and measurement date. Milliman’s Rebecca Ross provides perspective in this PERiScope article.