OPEB ACCOUNTING TRANSACTIONS
WASBO Accounting SeminarMarch, 2007
Presented by:
Kathy Guralski, School Finance AuditorWisconsin Department of Public Instruction
Need to know:Need to know:
1) Timing of contribution2) Amount of contribution3) Annual Required Contribution
(ARC) amount4) Current retiree benefits to be paid5) Implicit rate subsidy6) Salary OR FTE of employees
eligible to receive the benefit
Timing of Contribution
A contribution to the trust may be made at anytime during the fiscal year but
MUST be physically made by June 30th to be accounted for in that same fiscal
year ending June 30th.
Amount of Contribution
• How a contribution is accounted for and aided will vary depending on the following:
• A contribution to the trust may be:• An amount for the entire unfunded actuarial
accrued liability plus normal cost• ARC amount• Amount less than ARC• Amount more than ARC but less than unfunded
actuarial accrued liability plus normal cost
Annual Required Contribution (ARC) Amount
Amount determined by valuation Amortization of Actuarial Accrued
Liability Normal Cost
Current Retiree Benefits
If applicable, what amount your current retirees contribute towards their insurance cost.
If applicable, what cost the district incurs for current retirees
Implicit Rate Subsidy
Insurance rates are blended (one rate for all married, single, etc.)Premium rate paid by retirees may be lower than if retiree were rated separately (actives are subsidizing)GASB requires value of the insurance provided retirees (age related) versus blended rateDifference is implicit subsidy rate
Employees eligible toreceive the benefit and
their salary OR FTE
Determine who your employees are within the class that are eligible to receive the postemployment benefit being funded
Determine the amount of either their salary or FTE
Steps for entries:Steps for entries:
1) Allocation of contribution1) Exhibit B
2) Record contribution in applicable funds1) Exhibit C, Entries 1 & 2
3) Record contribution in fund 731) Exhibit C, #3
4) Record retiree paid portion of insurance premiums
1) Exhibit C, #4
5) Record payment to insurance providers1) Exhibit C, # 5, #6, #7, #8 & #9
6) Record payment for implicit rate subsidy1) Exhibit C, #10, #11 & #12
Allocation of contribution
Only amount up to ARC is eligible for federal/state grants and state categorical aid and may be allocated to appropriate functions
Any amount in excess of ARC is to be accounted for in fund 10, function 291000, object 218.
Allocation of contribution
Exhibit B Determine who your employees are that
are eligible for the benefit Determine either the salary OR FTE of the
eligible employees Allocate total contribution to appropriate
functions of eligible employees in the plan
Record Contribution Made from Applicable Funds
Contribution may be accounted for as a prepaid made at the beginning of the year, accounted for through the payroll system or as a lump sum payment Exhibit C, Entries 1 & 2 Exhibit A, #3
Record Contribution in Fund 73 Exhibit C, Entry 3
Record Retiree Portion of Insurance Premiums Exhibit C, Entry 4
Record Payment to Insurance Providers
District pays premiums on retirees in combination with active employees
Exhibit C, #5 Exhibit C, #7 Exhibit C, #8 Exhibit C, #9
Direct retiree payment from trust to insurance provider
Exhibit C, #6
Record Payment for Implicit Rate Subsidy
Exhibit C, #10
Exhibit C, #11
Exhibit C, #12
Exhibit D
BORROWING BY DISTRICT TO FUND OPEB
Borrowing by the district to fund OPEB liability is considered refinancingExhibit F
The contribution to the trust made with borrowed funds is not an expenditure for shared cost or categorical aid
Principal and interest payments in future years are costs in determining shared costs
Exhibit F
BORROWING BY TRUST TO FUND OPEB
Exhibit F Debt is reported within the trust Investment earnings remain in the trust
to be used for future payment of employee benefits
DPI CONTACTS
Kathy GuralskiSchool Finance Auditor
Lori AmesSchool Administration Consultant
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