August 25, 2008 (PLANSPONSOR.com) - Strategies to
deal with new standards imposed by the Governmental
Accounting Standards Board (GASB) have yet to be widely
decided by governments, despite a compliance deadline of the
end of 2009.
A study conducted by the nonprofit Cobalt Community
Research found 74% of local governments that provide
retiree health care are aware of the GASB 45
requirements, and 47% report that they have already
calculated their retiree health care liability or the
calculation is in process. GASB 45 requires states to
identify the costs for other post employment benefits
(OPEB) in their FY 2008 financial reports.
Among respondent governments providing retiree
health care, 20% indicated they have not yet determined
their approach to funding OPEB liabilities and 40% did
not answer the question. More than one-fifth (21%)
indicated they would continue a pay-as-you go approach to
financing; 8% said they would pay the full annually
required contribution (See
GASB Issues Proposal on Required
Contributions for OPEBs
) to prefund benefits, and 6% indicated they would
partially prefund the benefits.
For approximately 20% of the respondents, the new
requirement has heightened their awareness of other
long-term liabilities, and they have begun planning for
them. Another 14% said the experience has heighted
awareness, but they have not yet started to plan.
The study shows local governments are making
changes to benefit levels and exploring new investment
tools to help offset obligations.