GASB 75 OPEB Estimator Worksheet

About GASB 75

The Governmental Accounting Standards Board (GASB) has replaced GASB Statement 45 with Statement 75. Statement 75 expands on the GASB 45 requirement to account for other postemployment benefits other than pensions (OPEB) over the working life of the employee rather than on a pay-as-you-go basis. Statement 75 now requires public-sector entities to present more extensive note disclosures and required supplementary information (RSI) about their OPEB liabilities in their audited financial statements.

Another change with GASB 75 is the requirement to show the entire unfunded OPEB liability on your statement of net position. This means GASB 75 may have a material effect on your financial statements, even if GASB 45 did not.

Even cities that do not contribute directly toward retiree benefits will likely have some GASB OPEB liability due to 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 Statement 75, should be calculated and accounted for on city financial statements.

It is worth noting that cities with age-banded rates (i.e., cities that are fully insured with 50 or fewer employees) potentially will not have an implicit rate subsidy or GASB OPEB liability. However, if the city “blends” the age-banded rates into a single/family rate, then the implicit rate subsidy likely exists.

GASB Statement 75 continues to allow plans with fewer than 100 employees (active and inactive) to use a specified alternative measurement method instead of an actuarial valuation to determine the total OPEB liability.

The League has worked with an outside actuary to incorporate the changes made under GASB 75 into a simplified worksheet to help cities with fewer than 100 employees estimate their OPEB liability. This worksheet is intended to give cities a general idea of the materiality of their OPEB liability; however, it is not a substitute for calculating the OPEB liability using the alternative measurement method or having an actuary do a valuation on your city’s OPEB liability.

—Learn more about GASB 75 from the GASB website

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OPEB Tool: Estimator worksheet

The League is offering 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. Cities may use the information from the worksheet as a starting point for discussions about whether the OPEB liability is material and whether an actuarial analysis is needed.

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 (cities that contribute toward retiree coverage will not be able to use this tool to estimate their liability).

—Use the Estimator Worksheet for GASB 75 OPEB Liabilities (xls)

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