GASB 68, 73 & 75 Pensions & OPEB - PowerPoint Presentation

Slide1

GASB 68, 73 & 75Pensions & OPEB

October 2018 BAR

Sabra Sand and Grace JimenezSlide2

Basis

GASB 68

covers all retirement plans through DRS

PERS 1,2 and 3

TRS 1,2, and 3

Measurement date is one year behind

GASB 73

covers TIAA-CREFF supplemental portion

Measurement date is current

Both Calculated and reported on a proportionate share basis of the totals for each retirement plan

GASB 75

covers

Other Postemployment Benefits through

PEBB

Measurement date is one year behindSlide3

GASB 68

Calculations use both the DRS PEFI and the DRS CAFR

https://www.drs.wa.gov/administration/annual-report/

Note data comes from both the DRS CAFR and the Washington State CAFR

Measurement date is a year behindSlide4

GASB 68

Start with the Excel workbook-preferably from the prior year

We will work on PERS 1

First, update the DRS total values (rows 6-9)

This data comes from the DRS FY17

PEFI page 126

shown by

planAmounts stated in thousands-need to multiply by 1,000 to get number to take proportionate amount ofSlide5

From College Excel worksheetSlide6

GASB 68 – Proportionate share

Proportionate share of

Beginning and ending NPL

Deferred outflows

Deferred inflows

Pension expense

Pension contributions

Change in proportionate share of ending NPL, DI, DO from prior yearAmortized by useful life of planPlan 1 has no useful life

Plans 2/3 useful life changes from year to year - defined by DRSSlide7

GASB 68 – Proportionate share – PERS 1

Get proportionate share from the FY17 PEFI

Proportionate share is stated as both a number and a percentage

For our calculations, we need the percentage

PERS 1 proportionate share includes an additional contribution referred to as a PERS Plan 1 UAAL

This is the underfunded portion that is getting pulled from PERS 2/3 contributions

Need to add both the PERS 1 percentage and the PERS 1 UAAL together to get the correct proportionate share for PERS 1Slide8

GASB 68 – Proportionate share – PERS 1

PERS 1 Proportion

Plan 1 0.001876%

Plan 1 UAAL + 0.113520%

Total 0.115396%Slide9

GASB 68 – Proportionate share – PERS 1

Move previous year (FY 16) proportionate share up to replace FY 15 data

Enter the proportionate share calculated from the two PEFI amounts

PERS 1 and PERS 1 UAAL = 0.115396%

Then go to the FY PEFI to get the FY 18 Proportionate share amounts as well

Need this to calculate proportionate share of current year contributions only

In addition, need to get FY18 total contributions

Comes from PEFI section “DRS 2018 CAFR Employer and

Nonemployer Contributions” (FY17, page 133; FY18, page………)Also stated in thousandsSlide10

GASB 68 – Proportionate share – PERS 1Slide11

GASB 68 – Proportionate share – PERS 1

The Proportionate share percentages are then multiplied across the columns against the DRS totals for each category to get the college’s proportionate share

*Some columns with no current year values were hidden for this presentationSlide12

GASB 68 – Change in Proportionate share – PERS 1

On the second tab of the workbook, you will need to calculate your change in proportion from the prior year to the current year you are working on

This basically takes the prior year amounts and increases or decreases them to adjust for the change in percentage from one year to the next

You will need to determine the change in amount for:

Ending Net Pension Liability

Any Deferred Outflows items

Any Deferred Inflows itemsSlide13

GASB 68 – Change in Proportionate share – PERS 1

Update all of the values to be the prior year values that you used last year in your pension liability calculations (FY16)

Update the proportionate share amounts to show the FY16 share and then the new FY17 shareSlide14

The values you will need for you for your entries to adjust your values are any changes in Ending NPL, and any deferred inflows and outflows.

A formula is built into the spreadsheet to bring them forward to the first tab

Slide15

GASB 68 – Proportionate share – PERS 1

Now, you should have all the values to do your T-accounts

To begin your T-account calculations

Enter your beginning balances (from the prior year calculations) for:

Pension Liability

Deferred Inflows

Deferred Outflows

No expense values are carried forward as those were expensed in your financial statementsSlide16

GASB 68 – Proportionate share – PERS 1

Next, reverse the prior year deferred inflows against pension liability as well as the prior year deferred outflows against pension liability

Debit the current year pension expense amount from above to:

Expense/pension liability

Book current year deferred inflows amounts from above to:

Pension liability/deferred inflows

Book current year deferred outflows amounts from above to:

Deferred outflows/pension liabilitySlide17

GASB 68 – Proportionate share – PERS 1

Make an entry for the change in proportion amounts

This gets fully expensed for PERS and TRS plan 1, but amortized for plans 2 and 3

Pension liability/expense

Make an entry for the deferred current year contributions (FY18) since we are reporting a year behind

Deferred outflows/expense

The ending balance in pension liability should equal your Ending net pension liability from the above calculation multiplying the total NPL by your proportionate share percentage.

There may be a small round difference due to the calculations as a percentage of thousands. You will need to make an entry to adjust NPL against expense to balance.Slide18

GASB 68 – PERS 2/3 and TRS 2/3

PERS 2/3 and TRS 2/3 both have useful lives left

This means that you must amortize the change in proportionate liability over that useful life/recognition period as determined by DRS

From FY17 DRS PEFI Notes page 131Slide19

GASB 68 – PERS 2/3 and TRS 2/3 (decrease in proportionate share)

If your change in proportionate liability is a reduction or negative amount in total, it is a deferred inflow

The initial entry in the year of the change is: 5281/5265 or Pension Liability/deferred inflow

Then you must create a schedule to amortize/expense over the recognition period as determined by DRS in the PEFISlide20

GASB 68 – PERS 2/3 and TRS 2/3

For each year of amortization, the entry is a 5265/6598 or deferred inflow/expense

These entries are necessary each year until fully amortizedSlide21

GASB 68 – PERS 2/3 and TRS 2/3 (increase in proportionate share)

If the change in proportionate liability is an increase or positive amount in total, it is a deferred outflow

The initial entry in the year of the change is: 1974/5281 or deferred outflow/pension liability

For each year of amortization, the entry is a

6598/1974

or

expense/deferred inflow

These entries are necessary each year until fully amortizedSlide22

GASB 73 – Pensions not within the scope of GASB 68

GASB 73 applies to pension plans that

do not

have a dedicated trust -TIAA-CREF

S

upplemental

R

etirement PlanThe Total Pension Liability (TPL) represents the amount of Supplemental Retirement Plan (SRP) benefits, earned as

of the valuation date, expected to be paid to current and future retirees.Slide23

GASB 73

State Board sends member data to the Office of the State Actuary to perform the valuation.

Valuations are performed every other year (2017, 2019, …)

On even years the prior year results are rolled forward to the new measurement date (6/30/2018).Slide24

GASB 73 – Proportionate Share

Proportionate share is based on annual contributions to the SBRP plan.

Employer contributions listed on the Pension/OPEB Disclosure Form were used to calculate FY18 proportionate share.

Colleges will either see an increase (deferred outflow) or a decrease (deferred inflow) in proportionate share of the TPL. Plan had an overall decrease in TPL. Slide25

GASB 73 – JE, Notes, RSI

You will receive an updated Excel workbook for FY18 which will contain:

Required journal entry for financial statements

Tables required for your Notes to Financial Statements

Tables required for your RSISlide26

GASB 75 – Other Postemployment Benefits

GASB 75 covers Other Postemployment Benefits

Medical

Dental

Vision

For our system, this is the postemployment benefits provided by the PEBB program, administered by the Health Care Authority.Slide27

GASB 75 – Who/What

Through the PEBB program all CTC’s provide other postemployment benefits to their retirees. OPEB creates implicit and explicit rate subsidies for retirees, that are funded through active employee premiums. The subsidies lower monthly premiums for retirees.

Retirees who elect to continue coverage & pay the retiree premiums are receiving OPEB. Slide28

GASB 75 – Subsidies

Implicit rate subsidy – “blended premium” T

he

total amount by which the premiums are higher for active employees when they are pooled with

retired

employees than when the active employees are separately rated

.

Explicit rate subsidy – Flat amount of employer contribution going towards retiree costsSlide29

GASB 75 – Biggest Changes

On the face of the financial statements, College’s will report their proportionate share of the State’s:

OPEB liability (Short & Long-term)

Deferred Outflows

Deferred Inflows

OPEB expense

Impact to net position Slide30

GASB 75 – Proportionate Share

Your proportionate share was calculated using your active, eligible employee headcount for PEBB.

Active & enrolled

Active & waived

Both will be eligible to receive benefits at retirement. Slide31

GASB 75 – Calculating your #s

OFM did

a ton

of work for us this year.

Spreadsheet allows you to select your College and your journal entry will populate.

Most important items for this year:

Double check your entry using your proportionate share

Double check your tables OFM provided

Understand the basics of GASB 75 so you can explain your numbers to your auditor. Slide32

GASB 75 – OPEB expense

OSA valuation does not take into account the transactions subsequent to the measurement date or the change in proportionate share between agencies. (12 or 14)

OFM report does not

include

FY18

benefit payments made by employers on behalf of employees for retiree subsidies.

(14)Slide33

GASB 75 – OPEB expense

Difference between your OPEB expense table in the Notes and the amount in your financial statement entry should be the transactions subsequent to the measurement date (14)Slide34

Questions??