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What is GASB Statement 75?

The Governmental Accounting Standards Board (GASB) Statement No. 75 addresses postemployment benefits other than pensions (other postemeployment benefits or OPEB), in the same way that GASB 68 addresses pension benefits. GASB 75 was issued In June 2015 to establish new accounting and financial reporting standards that require, for the first time, that the net liability for other postemployment benefits (OPEB) is reported in financial statements for employers with retirement plans across the country, including the Michigan Public School Employees Retirement System (MPSERS). It replaces the requirements of GASB Statements No. 45 and 57.

GASB 75 requires participants in a multi-employer cost sharing plan to:

  • Record a proportionate share of the net OPEB liability on their balance sheet.
  • Record a proportionate share of OPEB expense as defined by GASB on their income statement.
  • Include additional note disclosures and required supplemental information.

When did GASB 75 go into effect?

GASB 75 is effective for fiscal years beginning after June 15, 2017.

What is net OPEB liability?

The net OPEB liability is the amount of the total OPEB benefit that is not funded by investment assets. This net unfunded OPEB benefit will be a line item in your Statement of Net Position. As a MPSERS participating employer you are required to record your proportionate share of the net OPEB liability. This liability is not new; it exists as a normal part of OPEB funding, where a benefit system can be overfunded or underfunded depending on the value of the investments.

How is the net OPEB liability calculated?

This net liability is calculated as the plan’s total OPEB liability minus the market value of the plan’s assets. The Office of Retirement Services (ORS) will annually determine each reporting unit’s proportionate share of the liability and expense by measuring their proportionate share of the prior year’s net liability.

What is OPEB expense?

The OPEB expense represents the annual cost of the retiree healthcare benefit for members with the premium subsidy. Each MPSERS employer is required by GASB to record its proportionate share of the OPEB expense. GASB 75 requires that OPEB expense be reported using a method that presents service (normal) cost and other basic expenses (for example the cost of administering the healthcare benefit), as well as amounts recognized each year for deferred inflows of resources (which reduce the OPEB expense) and deferred outflows of resources (which increase the OPEB expense). Examples of deferred inflows and outflows include differences between projected and actual investment returns and differences between expected and actual actuarial experience. Deferred inflows and outflows are recognized over a period of years specified by GASB 75, depending on a variety of factors. GASB 75 also requires MPSERS employers to record their proportionate share of the OPEB expense.

Are UAAL Rate Stabilization payments included as statutorily required OPEB contributions?

No. Beginning with the fiscal year ending Sept. 30, 2018, 100% of the UAAL rate stabilization payment is included in the statutorily required pension contribution. The payments are no longer part of the required OPEB contribution.

How does GASB 75 affect my reporting unit’s retirement costs?

As with GASB 68, GASB 75 is for financial reporting purposes only and does not change funding of retirement costs for reporting units. Additionally, the liability and the associated expenses will be reported only on your government-wide financial statements (Statement of Net Position and Statement of Activities) and as any full accrual funds that also include payroll costs, and not your modified accrual fund level statements.  Note: Public Act 92 of 2017 changed future pension funding methodologies. However, those changes are unrelated to the adoption of GASB 75.

Does my reporting unit need this information for budgeting purposes?

For public schools and other organizations using the modified accrual basis of accounting, your reporting unit does not need this information for budgeting purposes since the method used to fund the Retiree Healthcare Fund has not changed. Community colleges, universities and other organizations that use full accrual basis accounting will need to budget for the OPEB expense but not the contributions. Ultimately, these financial reporting changes will only affect your reporting unit’s government-wide, full accrual financial statements starting with your fiscal year 2018.

Does GASB 75 apply to both the premium subsidy benefit (3% HCC) and the Personal Healthcare Fund (PHF) benefit?

GASB 75 applies only to contributions for the premium subsidy benefit (3% HCC), for which contributions are made to the Retiree Healthcare Fund. The Personal Healthcare Fund (PHF) benefit is a Defined Contribution benefit and is not affected by GASB 75.

How can I get more information on how to record this liability?

Discuss this issue with your CPA and professional auditor. The full GASB Statement No. 75 and an accompanying Implementation Guide are available at under Standards & Guidance. Statements are also known as “Pronouncements.”

Last updated: July 7, 2020