As year-end approaches there is no shortage of tasks. For 2018, in addition to the typical year-end preparations, you will want to ensure you are ready to implement the Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (OPEB). Below are three key areas for Wisconsin local governments to address as part of this preparation:
Do you participate in the Local Retiree Life Insurance program through the Wisconsin Department of Employee Trust Funds (ETF)?
Recently the State of Wisconsin released information on its multi-employer cost-sharing OPEB life insurance program. ETF has prepared information similar to what is provided for WRS pension plan participating governments. The information can be obtained on the ETF website. Compared to the Wisconsin Retirement System (WRS) pension plan, the Life Insurance OPEB plan is not as well funded, resulting in a significant net OPEB obligation being allocated to the participating employer governments. At this time participating governments should obtain the related information and work with their auditor to evaluate the implementation implications.
Do you participate in the Local Health Insurance program through Wisconsin ETF?
In a bulletin issued March 9, 2018, ETF clarified the local health insurance program does not meet the definition of a multi-employer plan; rather each employer who obtains insurance through the program has a single employer plan and needs to individually evaluate the implications of the new OPEB standard. ETF has clarified that retirees from participating local governments are allowed to remain on the plan at a blended premium, so there is an implicit rate subsidy OPEB under GASB 75 that needs to be evaluated by each participating government; regardless if the local government contributes toward the retiree premiums. ETF will annually provide census data on retirees who have remained on the plan to each participating local government. Upon receipt of this information you will need to share it with your actuary to evaluate the potential OPEB liability implications.
Do you offer other retiree benefits, including health insurance, through other programs?
Any local government that continues to pay a portion of retiree health insurance or allows retirees to remain on their insurance plan at the same premium as active employees is providing an OPEB which needs to be evaluated. This is similar to the criteria for reporting under GASB 45. At this time you should be working with an actuary to determine the appropriate actuarial valuation date, measurement date and actuarial assumptions as well as provide the required census data for the calculation of the total OPEB liability in compliance with the new standard.
GASB 75 is a complex new governmental accounting standard that requires coordination between your organization’s finance and human resources departments and its actuary and auditor. As you prepare for the December 31, 2018 year-end closing process, connect with your auditor for questions and assistance with implementation.
For more information on this topic, or to learn how Baker Tilly state and local government specialists can help, contact our team.