Factors to consider when establishing an employee benefit trust updated June 15, 2017 – Governmental Accounting Standards Board (GASB) Statement 45 and amended by Statement 75 were established to provide more complete and reliable financial reporting regarding other post employment benefits (OPEB). The statements address the costs and obligations governments incur when they provide post employment benefits, other than pensions, as compensation for services currently rendered by employees. As a result of these statements, school districts are required to determine their other post employment benefit (OPEB) liabilities. These statements do require a school district to set funds not aside for the future payment of the liability, only to determine the liability and disclose it in the financial statements. Choosing to fund the OPEB liability through a trust is strictly a local decision of the district. If district resources are available, setting funds aside for the future payment of these benefits appears to be a fiscally responsible thing to do. The following information is provided to assist you in making the decision of whether to set funds aside or continue on the as you current operating funds). “pay go” (pay current retirees from Fund other post employment benefits Fund a trust for future payment of post on the as you method: employment benefits: “pay go” A school district may choose to continue A district may choose to set up a trust payment of other post employment thereby making a contribution to the trust benefits from current year operating funds for payment of future post employment (pay as you go). Under this option, the benefits. Under this option, a school district is required to determine the OPEB district is required to determine the OPEB liability for financial reporting under the liability for financial reporting under the appropriate actuarial valuation or other appropriate actuarial valuation or other acceptable cost method. There are acceptable cost method. The difference several things a district may want to between making trust payments and “pay consider when choosing this method: as you is that funds are set aside in go” trust for future payment of the benefits, rather than paying the benefit as it comes due with operating funds. There are several things a district may want to consider when choosing this method: Fund other post employment benefits Fund a trust for future payment of post on the as you employment benefits: “pay go” method: The annual as you cost The annual contribution to the “pay go” becomes part of the trust becomes part of the district’s shared district’s
Factors to consider when establishing an employee benefit trust updated – June 15, 2017 Governmental Accounting Standards Board (GASB) Statement 45 and amended by Statement 75 were established to provide more complete and reliable financial reporting regarding other post employment benefits (OPEB). The statements address the costs and obligations governments incur when they provide post employment benefits, other than pensions, as compensation for services currently rendered by employees. As a result of these statements, school districts are required to determine their other post employment benefit (OPEB) liabilities. These statements do not require a school district to set funds aside for the future payment of the liability, only to determine the liability and disclose it in the financial statements. Choosing to fund the OPEB liability through a trust is strictly a local decision of the district. If district resources are available, setting funds aside for the future payment of these benefits appears to be a fiscally responsible thing to do. The following information is provided to assist you in making the decision of whether to set funds aside or continue on the “pay as you go” (pay current retirees from current operating funds). Fund other post employment benefits on the “pay as you go” method: Fund a trust for future payment of post employment benefits: A school district may choose to continue payment of other post employment benefits from current year operating funds (pay as you go). Under this option, the district is required to determine the OPEB liability for financial reporting under the appropriate actuarial valuation or other acceptable cost method. There are several things a district may want to consider when choosing this method: A district may choose to set up a trust thereby making a contribution to the trust for payment of future post employment benefits. Under this option, a school district is required to determine the OPEB liability for financial reporting under the appropriate actuarial valuation or other acceptable cost method. The difference between making trust payments and “pay as you go” is that funds are set aside in trust for future payment of the benefits, rather than paying the benefit as it comes due with operating funds. There are several things a district may want to consider when choosing this method: Fund other post employment benefits on the “pay as you go” method: Fund a trust for future payment of post employment benefits: The annual “pay as you go” cost becomes part of the district’s shared The annual contribution to the trust becomes part of the district’s
Factors%20to%20Consider%20establishing%20a%20Trust.docx