questions or comments?

QUESTIONS OR COMMENTS?Send us your questions regarding GASB 68

throughout the presentation. Follow these steps to submit your question electronically:

1. Text ‘GASB68’ to 667462. Wait for confirmation

message3. Reply with your question

THE REAL BOTTOM LINE

Questions? Text ‘GASB68’ to 66746

STAYING OUT OF THE RED:GASB 68 Impact on Ohio


Public Employees sell their labor to a public employer in exchange for wages and a benefits package, which includes the promise of a future pension.Particularly because the wages were historically often lower than the private sector, the pension promise is part of the “basis of the bargain.”

“The Employment Exchange”Rationale:


The Employment Exchange

GASB 68 will require public employers to include the proportionate share of the unfunded part of this promise on the Statement of Net Position.

Query:Is this unfunded liability enforceable as an obligation of the public employer?


Pension Protections Vary


The Ohio Environment

In Ohio, the amount a public employer must contribute to its pension obligation is capped by law – an act of the Ohio General Assembly.



If pension liabilities of the five systems continue to be unfunded, the impact could be shouldered in various ways, or a combination:• The local government• Individual employees• Further reforms from current contributors• Capital shifts from non-mandated benefits

(health)



The Challenge:• Depending on the manner in which the

liability is apportioned, GASB 68 could require reporting of a liability by a local government that it is not responsible for, and never becomes responsible for – dramatically distorting the financial report of that local government.



Failing to follow GASB 68:• will result in modified audit opinions • will mean that Ohio governments fail to follow

accounting standardsWe wanted to find a way to accurately report Ohio governments’ financial positions while following accounting standards.


AOS Proposed Guidance

Report the unfunded pension liability as a separate line item on the Statement of Net Position (for multiple pension systems, see footnotes for detail)Include language in the MD&A that explains Ohio’s legal environment and the limitations on enforcement of unfunded pension liability as against the local government.



Include in MD&A a statement that:Because of the discussion below, many end users of this financial statement will gain a clearer understanding of the Government’s actual financial condition by adding deferred inflows¹ related to pension and the net pension liability to the reported net position.¹ deferred outflows would be subtracted: if applicable


AOS Proposed GuidanceMD&A Net Position Summary

Refer to page 3 in your handout


AOS Proposed GuidanceStatement of Net Position

Refer to page 7 in your handout

Long-Term Liabilities:

Deferred Outflows of Resources


AOS Proposed GuidanceStatement of Activities

Refer to pages 8 and 9 in your handout



Note that the liability is proportioned between governmental activities and individual enterprise funds.



Note XX on Pension Liability• Net Pension Liability represents a liability to

employees for pensions• Represents the government’s proportionate

share• Pension Liability is reported on the accrual basis

QUESTIONS OR COMMENTS?Send us your questions regarding GASB 68

throughout the presentation. Follow these steps to submit your question electronically:

1. Text ‘GASB68’ to 66746

2. Wait for confirmation message

3. Reply with your question

questions or comments?

Documents

text gasb68

net pension liability

pension promise

pension obligation

pension liabilities

ohio environmentin ohio

future pension

statement of net position