In March 2017, the GASB issued Statement No. 85, Omnibus 2017. The GASB uses omnibus statements to address practice issues that are identified while applying other recent GASB standards or through technical inquiries from stakeholders. This particular omnibus statement addresses ten topics, six of which fall under the pension and OPEB umbrella.
Topics Other Than Pension and OPEB
The four topics unrelated to pension and OPEB include:
- Blending component units-Single column business-type activity primary governments may only blend a component unit if it meets the requirements for blending in GASBS No. 14. (The intent of the changes in GASBS No. 61 was not to provide the option of blending any component unit.)
- Goodwill and negative goodwill-Goodwill and negative goodwill should not be reported for acquisitions occurring prior to the GASBS No. 69 effective date.
- Classifying real estate held by insurance entities-Insurance entities should follow the provisions of GASBS No. 72 for each unit of account of real estate and not GASBS Nos. 10 and 62.
- Amortized cost measurement for certain investments-Money market investments and participating interest-earning investment contracts may, but are not required to, be measured at amortized cost in accordance with GASBS No. 31.
Topics Related to Pension and OPEB
Timing of the Measurement of Pension/OPEB Liabilities and Expenditures
Previous statements only specified the measurement of pension and OPEB amounts under the economic resources measurement focus. This Statement specifies that liabilities should be measured at the end of the reporting period when financial statements are prepared using the current financial resources measurement focus. In addition, all expenditures should be measured, including (a) amounts payable to the plan and (b) administrative costs incurred by the employer, but not if the plan is administered through a qualifying trust under GASBS Nos. 73 or 75.
On-Behalf Payments for Pensions or OPEB in Employer Statements
Similarly, previous statements only specified the treatment of on-behalf payments under the economic resources measurement focus. This Statement clarifies that the previous requirements from GASBS No. 24 generally should continue to apply. For employer financial statements prepared using the current financial resources measurement focus, the employer should recognize expenditures (and revenue) for on-behalf payments equal to the total of (a) amounts paid during the reporting period by nonemployer contributing entities to the plan (or for benefits as they come due) and (b) the change between the nonemployer contributing entities’ beginning and ending balances of amounts normally expected to be liquidated with expendable available financial resources. Both (a) and (b) above include payables to the plan.
Payroll-related Measures in OPEB Required Supplementary Information (RSI)
For OPEB, GASBS No. 85 makes the same changes that GASBS No. 82 made for pensions, changing covered-employee payroll to covered payroll. Covered payroll is the measure that should be used in RSI schedules for both single-employer and multiple-employer defined benefit OPEB plans. Covered payroll is defined as the payroll on which contributions to the plan are based. Note that if contributions are not based on a measure of pay, no measure of payroll should be presented.
Classification of Employer-paid Member Contributions for OPEB
Also to be consistent with the GASBS No. 82 changes for pensions, employer payments to satisfy member OPEB contribution requirements are classified as plan-member or employee contributions. The expense for those payments should be recognized in the period assessed and classified in the same manner as other compensation amounts, such as salaries and fringe benefits.
Alternative Measurement Method for OPEB
To fill holes in GASBS Nos. 74 and 75 under the alternative measurement method OPEB provisions, modifications were made to the following assumptions:
- Expected point in time at which plan members (employees) will exit from active service.
Changes were also made to the amounts that should be recognized in expense for the current reporting period.
Cost-sharing Defined Benefit OPEB Plans
In a continuing theme, the same issues that the GASB fixed in GASBS No. 78 for cost-sharing pension plans apply to OPEB plans. Therefore, GASBS No. 85 modifies the recognition and measurement requirements, notes to the financial statements, and RSI because the previously required measurements and information is often not available under these arrangements. Such arrangements include cost-sharing OPEB plans that (a) are not a state or local governmental OPEB plan, (b) provide defined benefit OPEB to both state and local government employers and nongovernmental employers, and (c) have no predominant governmental employer.
GASBS No. 85 is effective for periods beginning after June 15, 2017, with earlier application encouraged.