GASB is an acronym for the Governmental Accounting Standards Board, which is the source of generally accepted accounting principles used by State and local governments such as the FPPA. All State and local government employers affiliated with FPPA that follow generally accepted accounting principles (GAAP) are required to implement these provisions.

The objective of these statements is to improve financial reporting by State and local governmental pension plans and participating employers. Employers, who previously had no reporting responsibility related to pension liability/assets, will now include their proportionate shares of the Net Pension Liability on their financial statements, as well as other statistics such as pension expense and deferred inflows/outflows.

No. The new standards will not affect or alter how public pensions are funded or how your contribution rates are calculated. Employers will continue to fund the plan according to the required contribution rate/amount as set by Statute or the actuarial valuation. The change resulting from the new standards is an accounting change — you will need to report a liability or asset representing the funding deficit or surplus attributable to the employer.

The current measure of pension expense is your annual required contributions to FPPA. If you paid your required contributions, you had no additional liability to FPPA. The new standards require that employers report their proportionate share of the collective net pension liability to the extent that total plan pension liability exceeds plan net assets.

GASB’s position is that government employee pensions are a component of the employment relationship between the employer and employee; they are part of the employee compensation package. The employer’s participation in a pension plan provided by a separate entity or pension system, such as FPPA, does not limit the employer’s responsibility for the cost of these future pension benefits.

If the total pension liability of the separate pension system is not 100 percent funded, employers have a liability for the unfunded portion of the pension benefits earned by their employees to date. This liability should be recognized in the employer’s financial statements along with an associated pension expense.

Based on current actuarial and financial information, FPPA will annually provide you reports on the net pension liability, pension expense, deferred inflows/outflows and other related disclosures for you.

Proportionate shares will be determined by each employer. FPPA will provide a schedule of employer contributions to each cost-sharing employer as well as the plan total contributions. It is the responsibility of each employer to determine the most appropriate method of calculating proportionate share.

The net pension liability represents the difference between the Plan’s total pension liability based on actuarial valuations and the assets currently available within the Plan to pay that liability.

FPPA will provide affiliated employers the required information for employer reporting.  The information will be provided through the FPPA Employer Portal in Q4.

If your plan is exempt from audit, you will not need to implement the new standards for that fiscal year.  However, it is important to note that FPPA is unable to carve out the reporting requirements for those pension plans that are exempt from audit.  We will provide you with the annual reporting and expense those costs to your plan.  At the point when your plan must satisfy the audit requirement, you will have the information needed to implement the standards.

No, the net pension liability is unlike any of the other liabilities reported on an employer’s balance sheet, in that it is not immediately due and cannot be paid off under any accelerated schedule. Contribution rates/amounts are set in Statute or within the actuarial valuation. As a result, an employer would not be able to remit payment, in addition to their required contribution amount, for their proportionate share of the net pension liability in order to remove this liability from their financial statements.  As of the 1/1/2014 actuarial valuations, the Statewide Retirement Plan are fully funded and are not reporting a liability. As such, you could report an asset within your financial statements on these plans.  

The Colorado State Controller opined on 3/2014 that the State contribution to volunteer firefighter plans will continue to be treated as a supplemental discretionary payment and will not result in GASB 68 reporting to the State. 

The AICPA issued guidance to plan auditors regarding the testing of employer reported data used in the plan actuarial valuation. Employers with employees in the Statewide Retirement Plan are subject to a payroll attestation request from FPPA and its auditor.

This attestation request is communicated annually, by October, to selected employers. The request is for your auditor to test the data sent to FPPA for pension purposes in the prior fiscal year and to issue an attestation report of the findings to FPPA’s audit or prior to April of the next year. Suggested procedures, representation language and a sample report are provided. The cost of this attestation is the responsibility of the employer. The guidance can be found here.

Though FPPA didn’t create these two new standards, we know their implementation will be a joint responsibility we’ll be sharing with you. FPPA will continue to communicate with you about these new regulations, and will be posting additional information onto this website on a regular basis, so check back with us as often as you’d like. You should also consult with your independent auditor and/or your own accountant about these GASB standards and their implementation. It is important to note that FPPA will not be able to provide you direct assistance on how to report this information within your financial statements.