September 12, 2013
Your Tilted Balance Sheet
–
GASB 68
Overview
Presented by:
Kevin S. Wong, CPA
Gilbert Associates, Inc.
kswong@gilbertcpa.com
1
Background and Overview
Background
• Project initiated in January 2006
• Exposure draft issued June 2011
• Final standard issued June 2012
2
Background and Overview (Continued)
Overview
•
Amends current GASB requirements that focus
more on required contributions
3
Background and Overview (Continued)
• Implementation date

Fiscal years beginning after June 15, 2014 (years ending
June 30, 2015, December 31, 2015)
4
Big Picture – why?
1. Better transparency, consistency, and
comparability with regard to pension costs
• No more “kicking the can down the road”
• Changes focus from a “funding” approach to
“earnings” approach
• Liability for benefits “earned” vs. contributions
“paid”
5
Big Picture – why? (Continued)
2. Recognition of the entire net pension liability
3. A more comprehensive measure of pension
expense
4. Pension Actuaries full employment act 
6
Required Calculations
a. Net Pension Liability
b. Pension expense
c. Pension-related deferred outflows/inflows
7
What kind of plan do you have?
Single employer
• Benefits the employees of only one employer
Agent multiple employer
• Assets are pooled for investment purposes but
legally segregated
8
What kind of plan do you have? (Continued)
Cost-sharing, multiple employer
•
•
•
Participating employers pool their pension
obligations
Plan assets can be used to pay any participating
employer’s pension
Most JPA staff participate in CalPERS’ 2.0% or 2.7%
at 55 Miscellaneous pool
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What kind of plan do you have? (Continued)
Impact to the financial statements is based on the
plan type:
i. Single-employer and Agent-employer Plans
•
100% recognition
ii. Cost-sharing multiple employer Plans
•
Recognize their proportionate share
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Required Calculations–Net Pension Liability
•
•
•
(Total Pension Liability) – (Pension Plan’s Net
Position) = Net Pension Liability
Determined as of no earlier than sponsoring
entity’s prior fiscal year end (“measurement
date”)
Approach based on a “benefits-earned” rather
than a “funding-due” perspective
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Determining Total Pension Liability
(TPL-PNP=NPL)
Definition
• The portion of the actuarial present value of
projected benefit payments that is attributed to
past periods of employee service (what has been
“earned”)
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Determining Plan Net Position
(TPL-PNP=NPL)
• Measured at the measurement date
• Same valuation methods used by the Plan
13
Determining Net Pension Liability
(TPL-PNP=NPL)
Total Pension Liability
–
Plan Net Position
= Net Pension Liability
14
Pension Expense
•
•
Changes in Net Pension Liability
Incremental recognition of:
 Differences between expected and actual
• Economic or demographic factors
• Investment earnings
 Changes in assumptions
15
Pension-related deferred outflows/inflows
•
•
Unrecognized items not yet charged to pension
expense
Contributions from the employer after
measurement date but before reporting period
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Note Disclosures
1. Description of the pension plan
2. Assumptions used to measure total pension
liability
• Detailed disclosures about the discount rate
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Note Disclosures (Continued)
3. The pension Plan’s fiduciary net position
• Can refer to Plan’s report
• Plan’s basis of accounting
4. Brief description of changes in benefit terms
and assumptions since prior measurement
date
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Note Disclosures (Continued)
5. Measurement date and date of the actuarial
valuation
6. Employer’s policy for determining actual
contributions to the plan
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Note Disclosures (Continued)
7. If not separately disclosed in the financial
statements, disclose aggregate:
a.
b.
c.
Net pension liabilities
Deferred pension outflows/inflows
Pension expense for the period
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Note Disclosures (Continued)
•
•
Components of deferred pension inflows and outflows,
Schedule of anticipated recognition of pension expense
of deferred outflows/inflows for the next five years.
21
Note Disclosures (Continued)
Additional disclosures for each Single-Employer or
Agent Multiple-Employer Plan
• Detail of changes in a schedule of changes in net
pension liability
22
Note Disclosures (Continued)
Additional disclosures for Cost-Sharing MultipleEmployer Plans
• The employer’s proportion (amount and
percentage) of the collective net pension liability
23
Note Disclosures (Continued)
Additional disclosures for Cost-Sharing MultipleEmployer Plans (Continued)
• The amounts of the net pension liability, deferred
pension outflows and inflows, and pension expense
recognized in the financial statements for each
cost-sharing plan
24
Required Supplementary Information
a. Ten-year schedule of changes in net pension
liability (single-employer or agent multipleemployer plan only)
b. Ten-year schedule of components of net pension
liability and covered payroll
c. Ten-year schedule of related contributions
25
Required Supplementary Information
(Continued)
d. Notes to required schedules
i. Information about factors that significantly affect
the identification of trends in the amounts reported
ii. Significant methods and assumptions used in
determining actuarially calculated employer
contributions
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Effective date and transition
• Effective for financial statement periods beginning
after June 15, 2014
• Earlier application is encouraged 
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What Should I Do Now???
• Know the overview of changes
• GASB Pension Podcast Series (Dec 2012)
• Familiarize yourself with your plan
• Enlist the help of CalPERS
• July 26, 2013 memo re: assistance
• Begin educating stakeholders
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