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GASB OPEB Assistance

GASB OPEB actuarial services for cities

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About GASB OPEB

The Governmental Accounting Standards Board (GASB) requires public-sector entities to begin accounting for the promise to provide other post-employment benefits (OPEB) over the working life of the employee rather than on a pay-as-you-go basis (as is currently done by many public-sector entities).

Even cities that do not contribute directly toward retiree benefits will likely have some GASB OPEB liability because of a state requirement that early retirees be pooled with active employees for continued health and dental benefits. This pooling creates an "implicit rate subsidy" that under GASB should be calculated and accounted for on city financial statements.

Cities with age-banded rates for their medical plan likely will not have an implicit subsidy or GASB OPEB liability—in general, cities that are fully insured with 50 or fewer employees are issued age-banded rates. However, if the city "blends" the age-banded rates into a single/family rate, then the implicit subsidy likely exists.

There have also been questions about whether GASB 45 applies to small cities. Based on informal discussions with the Office of the State Auditor, these requirements apply to any governmental entity that has other post- employment benefits and that prepares financial statements in accordance with generally accepted accounting principles.

However, for cities under 2,500 in population that are on a cash basis of accounting, payments of these benefits should already be recognized in the city's financial statements and no additional financial presentation would be required for the cash basis—but disclosure of the plan could be required (e.g., plan description, number of retirees on the plan, amount of city contribution for single and family, total amount paid in benefits, etc.). Cities under 2,500 in population with questions or concerns about accounting for post-employment benefits should contact the Office of the State Auditor at (651) 296-2551.

Additional information on GASB OPEB:

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Partner selected to provide actuarial services

The League of Minnesota Cities has partnered with Van Iwaarden Associates to offer actuarial services to help member cities evaluate and calculate their GASB OPEB liability. Member cities selecting Van Iwaarden to conduct their actuarial valuations will receive discounted fees.

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OPEB Tools—Estimator worksheet available

The League, in partnership with Van Iwaarden Associates, offers a simplified worksheet to assist cities with estimating their potential OPEB liability. The use of the worksheet is not a guarantee of a city’s OPEB liability (note: results may vary based on demographics, health plan options, and premium costs). Cities may use this information as a preview to their annual OPEB costs.

Cities that may benefit from the use of the worksheet include:

  • Cities with fewer than 100 plan members.
  • Cities with only the implicit rate subsidy (i.e., cities that contribute toward retiree coverage will not be able to use this tool to estimate their liability).

—View Estimator Worksheet for GASB 45 OPEB Liabilities (xls)

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Discounted actuarial services available

The League is also contracting with Van Iwaarden Associates to provide cities with direct actuarial services at discounted fees.

  • Cities with fewer than 100 plan members that have just the implicit rate subsidy will receive an actuarial valuation using the Alternative Measurement Method (AMM) for less than $1,500. Cities eligible for this option will receive a certified actuarial report and up to one hour of telephone consultation to review and discuss the report.

    Van Iwaarden requires data in advance to complete the valuation. Cities must provide data using the AMM Input Worksheet:
    —View the AMM Input Worksheet (xls)
  • Larger cities and/or those with more complex retiree benefit arrangements will receive full actuarial services at a discounted rate. Full-valuation fees for most cities range from under $3,500 to about $15,000, depending on the number of participants and the complexity of benefit arrangements.

    Cities should review the Data Request for Full Actuarial Valuation spreadsheet for a listing of items that must be provided to Van Iwaarden Associates.
    —View the Data Request for Full Actuarial Valuation (xls)

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