Reporting
Pensions
Under GASB 68
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Authority
• GASB Statement 68 – Accounting and
Financial Reporting for Pensions
• GASB 68 Implementation Guide
Effective for fiscal year 2015
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Presenters
Mark Whelan, CPA
Chief Financial Officer, Kentucky Teachers’ Retirement System
502.848.8640
mark.whelan@ky.gov
Todd Coleman, CPA
Controller, Kentucky Retirement System
502.696.8453
todd.coleman@kyret.ky.gov
Susan Barkley, CPA
Assistant Director, Kentucky Department of Education
502.564.3930, ext 4437
susan.barkley@education.ky.gov
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Terminology
Old
New
• Actuarial Accrued
Liability (AAL)
• Unfunded Actuarial
Accrued Liability
(UAAL)
• Total Pension
Liability (TPL)
• Net Pension Liability
(NPL)
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Key Changes
• The part of total pension liability not
covered by plan assets = net pension
liability (NPL)
• NPL is a liability on entity-wide
statements
• Changes in calculating NPL
o Some components are expensed
o Some are deferred outflows/inflows
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NPL
TPL – fair value of plan assets = NPL
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Actuarial Valuation
• Actuarial valuation will contain:
o TPL
o Components of change in NPL
o Information needed for note disclosures
• Proportionate share determined by
actuaries or retirement plan
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Changes in NPL
Most will be an expense in the period of
the change
o
o
o
o
Service cost
Interest on TPL
Benefit changes
Projected earnings
on pension plan
investments
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Changes in NPL
• Some components are deferred
outflow/inflow
• Amortized over average of expected
remaining service lives
o
o
o
o
Difference between expected and actual performance
Changes of assumptions
Change in proportionate share
Difference between proportionate share of all
contributions and employer’s contributions
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Investment Earnings
• Amortized over 5 years only
• Report net deferred outflow/inflow
from this component
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Amortization
• Must track each component
separately
• Must track each year separately
• Use the appropriate time period for
each
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CHANGE COMPONENT FOR NPL
EXPENSE
DEFERRAL
Service cost
Immediately
None
Interest on the TPL
Immediately
None
Projected investment earnings
Immediately
None
Changes in benefit terms
Immediately
None
Initial period
amount
Expense over avg.
remaining service
period of actives
and inactives
Changes in assumptions
Difference between assumed and
actual economic and demographic
factors
Difference between projected and
actual earnings
Other changes in NPL
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Expense over 5
years
Immediately
None
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Special Funding Situation
•
•
•
•
Nonemployer contributing entity (state)
Legal requirement to contribute directly
Federal grants? No
Districts must record revenue and
expense equal to its proportionate share
of state contributions – change in NPL
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Fund Statements
Nothing changes due to GASB 68
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Entity-wide Statements
• NPL as a liability
• On-behalf revenue for state
contributions
• Deferred outflows/inflows amortized
(by function)
• If the NPL change results in a net
credit, use expense anyway, not
revenue
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Enterprise Funds
• Full accrual basis
• These funds show part of NPL and
other stuff on their statements, too
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To Get Started in FY 15
• Prior period adjustment on Statement of
Activities
o Need beginning of year NPL (at 7/1/14)
Dr. Net position (beginning)
Cr. Pension liability
• Beginning deferred outflow/inflow can be
$0 first year
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Note Disclosures
Lots!
Descriptive information about the plan
Significant assumptions in TPL
Changes of assumptions
Pension expense
Deferred outflows/inflows by component for
this period and future periods
• Proportionate share information
•
•
•
•
•
•
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RSI
• 10-year schedules
o These build over time, can start FY 15 with one
year
•
•
•
•
Proportionate share
Covered payroll
Plan net position as % of TPL
Show state and district shares
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OPEB
• Not included in scope of GASB 68
• Will likely be addressed in a future
standard
• Districts will have to record it (amount
paid for medical insurance fund)
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Our Plans
KTRS
• Defined benefit
• Cost-sharing multiple
employer plan
• Special funding
situation
• State will recognize
100% of NPL
• Note disclosures req’d
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CERS
• Defined benefit
• Cost-sharing multiple
employer plan
• NO special funding
situation
• Districts recognize
proportionate share of
NPL
• Note disclosures req’d
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Looking Ahead
• CERS info will come from KRS actuaries
o Expect a template to show proportionate share
info January 2015
• Use the FY 14 actuarial valuation for
the district FY 15 financial statements
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