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QUESTIONS OR COMMENTS?

QUESTIONS OR COMMENTS?. Send us your questions regarding GASB 68 throughout the presentation. Follow these steps to submit your question electronically:. Text ‘GASB68’ to 66746 Wait for confirmation message Reply with your question. STAYING OUT OF THE RED:. THE REAL BOTTOM LINE.

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QUESTIONS OR COMMENTS?

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  1. QUESTIONS OR COMMENTS? Send us your questions regarding GASB 68 throughout the presentation. Follow these steps to submit your question electronically: Text ‘GASB68’ to 66746 Wait for confirmation message Reply with your question

  2. STAYING OUT OF THE RED: THE REAL BOTTOM LINE GASB 68 Impact on Ohio Questions? Text ‘GASB68’ to 66746

  3. Rationale: “The Employment Exchange” Public Employees sell their labor to a public employer in exchange for wages and a benefits package, which includes the promise of a future pension. Particularly because the wages were historically often lower than the private sector, the pension promise is part of the “basis of the bargain.” Questions? Text ‘GASB68’ to 66746

  4. The Employment Exchange • Query: • Is this unfunded liability enforceable as an obligation of the public employer? GASB 68 will require public employers to include the proportionate share of the unfunded part of this promise on the Statement of Net Position. Questions? Text ‘GASB68’ to 66746

  5. Pension Protections Vary Questions? Text ‘GASB68’ to 66746

  6. The Ohio Environment In Ohio, the amount a public employer must contribute to its pension obligation is capped by law – an act of the Ohio General Assembly. Questions? Text ‘GASB68’ to 66746

  7. The Ohio Environment • If pension liabilities of the five systems continue to be unfunded, the impact could be shouldered in various ways, or a combination: • The local government • Individual employees • Further reforms from current contributors • Capital shifts from non-mandated benefits (health) Questions? Text ‘GASB68’ to 66746

  8. The Ohio Environment • The Challenge: • Depending on the manner in which the liability is apportioned, GASB 68 could require reporting of a liability by a local government that it is not responsible for, and never becomes responsible for – dramatically distorting the financial report of that local government. Questions? Text ‘GASB68’ to 66746

  9. The Ohio Environment • Failing to follow GASB 68: • will result in modified audit opinions • will mean that Ohio governments fail to follow accounting standards • We wanted to find a way to accurately report Ohio governments’ financial positions while following accounting standards. Questions? Text ‘GASB68’ to 66746

  10. AOS Proposed Guidance Report the unfunded pension liability as a separate line item on the Statement of Net Position (for multiple pension systems, see footnotes for detail) Include language in the MD&A that explains Ohio’s legal environment and the limitations on enforcement of unfunded pension liability as against the local government. Questions? Text ‘GASB68’ to 66746

  11. AOS Proposed Guidance Include in MD&A a statement that: Because of the discussion below, many end users of this financial statement will gain a clearer understanding of the Government’s actual financial condition by adding deferred inflows¹ related to pension and the net pension liability to the reported net position. ¹ deferred outflows would be subtracted: if applicable Questions? Text ‘GASB68’ to 66746

  12. MD&A Net Position Summary AOS Proposed Guidance Refer to page 3 in your handout Questions? Text ‘GASB68’ to 66746

  13. Statement of Net Position AOS Proposed Guidance Deferred Outflows of Resources Long-Term Liabilities: Refer to page 7 in your handout Questions? Text ‘GASB68’ to 66746

  14. Statement of Activities AOS Proposed Guidance Refer to pages 8 and 9 in your handout Questions? Text ‘GASB68’ to 66746

  15. AOS Proposed Guidance Note that the liability is proportioned between governmental activities and individual enterprise funds. Questions? Text ‘GASB68’ to 66746

  16. AOS Proposed Guidance Note XX on Pension Liability • Net Pension Liability represents a liability to employees for pensions • Represents the government’s proportionate share • Pension Liability is reported on the accrual basis Questions? Text ‘GASB68’ to 66746

  17. QUESTIONS OR COMMENTS? Send us your questions regarding GASB 68 throughout the presentation. Follow these steps to submit your question electronically: Text ‘GASB68’ to 66746 Wait for confirmation message Reply with your question

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