Units Offering OPEB that are Subject to GASB Statement 75 Reporting Requirements
Please note that this discussion does not apply to any GASB Statement 74 reporting (units that are holding assets to meet OPEB obligations) or timeline you have established with your actuaries.
Many units across the State that have no assets set aside in a trust for OPEB benefits and that will be reporting under GASB Statement 75 in 2018 have received email correspondence from their actuaries, Cavanaugh MacDonald (CM), regarding transition period valuation dates for the OPEB valuation. GASB Statement 45 is the current guidance and GASB Statement 75 will be in effect with the fiscal year ending June 30, 2018. Units are receiving emails based on their next valuation date. In brief, CM has proposed that units for which a valuation report would have been prepared as of 12/31/2016 for Statement 45 purposes, instead will have their valuation prepared as of 6/30/2016. This valuation, prepared as of 06/30/2016, will suffice for both GASB Statements 45 and 75. This "as of" date falls within the parameters set by Statement 75; the valuation will be rolled forward for a measurement date of June 30, 2017.
It is our understanding that the timeline proposed by CM is beneficial to the units for several reasons. Perhaps most crucially, CM is dependent on other parties for information needed to prepare the valuations. In some cases, they will not receive the information in time to prepare and distribute timely the valuation reports for an initial measurement date any later than 6/30/2017. Preparing the valuation as of 6/30/2016 also will minimize the burden on the units; the units will only have to provide information to CM once and the information can be used for two years. The cost will be reduced; instead of paying for two valuations dated 6 months apart, CM will prepare one valuation that can be used for both the final year of GASB 45 and the first year of GASB 75.
Units that do not have a June 30 fiscal year end also will have a 6/30 measurement date.
In order for the study process to flow smoothly, it is important that units provide their accurate information to CM on schedule as requested by CM. We expect that valuation reports for the implementation year of GASB 75 will be made available in the spring of 2018. We have received several inquiries asking how units should respond to this proposition. We have no issues with the timeline as presented and encourage units to work with the actuaries to ensure a timely delivery of future valuation reports.
Units that fall under Statement 73 for LEOSSA
On a related note, we have received several questions from units regarding their LEOSSA actuarial studies and our requirement that all applicable units have a study done for the initial implementation of GASB Statement 73. The study needs to be as of an acceptable date with regards to the Standard (e.g the measurement date cannot be earlier than one year prior to 6/30/2017 and the valuation date cannot be earlier than 30 months prior to 6/30/2107). It does not need to be in hand and completed at 6/30/2017. Of course the study will need to be available such that it does not impact the timely completion of your annual audit.
If you have any questions or concerns, please contact us at (919) 814-4299.