The Governmental Accounting Standards Board has drafted advice that could affect how states, cities and other public employers calculate health and pension retirement benefits contributions.
GASB, Norwalk, Conn., says the proposed Technical Bulletin, Determining the Annual Required Contribution for Postemployment Benefits, makes it clear that public employers can use actual known amounts, not just estimates, when calculating retirement benefits contribution adjustments.
Earlier GASB instructions, given in GASB Statement Number 27, Accounting for Pensions by State and Local Governmental Employers, and GASB Statement Number 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, explained the rules for estimating the amounts.
The proposed technical bulletin deals with the portion of the annual contribution calculation related to past overpayments and underpayments.
When those amounts have been recognized in the financial statements, public employers need to make adjustments in future annual retirement benefits contributions to avoid counting the same amount twice, GASB officials write.