GASB Approves Statement Nos. 67 and 68

The Governmental Accounting Standards Board (GASB) recently established new reporting requirements for “defined benefit” pensions plans. (These plans guarantee a certain level of benefits based on a calculation, typically including years of service, as opposed to the 401k –type plans for which the benefits depend on performance of the investments.) In summary, the requirements require governments providing defined benefit pensions to 1) recognize their long-term obligation for pension benefits as liabilities on the balance sheet for the first time, 2) more comprehensively and comparably measure the annual costs of pension benefits, and 3) enhance note disclosures and Required Supplementary Information for pension plans. GASB took this action by adopting Statements 67 and 68, which supersede Statements No. 27 and 50. (The statement numbers are provided in case a reader would like to review more detailed information on GASB’s website,

These new statements will affect how the City reports pension obligations rather than how the City funds its pensions, and could lead to differences between reporting and funding. These changes will be incorporated into the City’s Comprehensive Annual Financial Report (CAFR), as well as in the separately issued Police and Fire Pension audit reports. Statement 67 will be effective for the fiscal year ending June 30, 2014, while Statement 68 will be effective for the fiscal year ending June 30, 2015. Finance staff will provide more information on these changes as their effect on the City is determined.