GASB Statement No. 68 is a financial reporting standard that replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers. It requires participants in a multiple employer cost-sharing plan to:
The net pension liability is the amount of the total pension benefit that is not funded by investment assets. This net unfunded pension benefit will be a line item in your balance sheet. As a MPSERS participating employer you are required to record your proportionate share of the net pension liability. This liability is not new; it exists as a normal part of pension funding. A pension plan can have a net asset or net liability depending on whether it is overfunded or underfunded based on the value of its investments.
MPSERS has had a net pension liability since the early 2000s, worsened by the market losses in 2008 and 2009. While the goal of prefunding the pension is to be 100% funded, funding a pension benefit is very long term in nature. During this time span, it is normal for the retirement plan to be either overfunded or underfunded at any given point in time.
Each year, the pension plan's actuary calculates the amount of money needed to fund the accrued benefits of both active and retired members. This liability is compared to the market value of current assets. The net pension liability is the difference between the assets and the liability. The actuarial calculation is based on assumptions such as how long people work, how much they are paid, when they will retire, life expectancy, etc.
Where do I find my reporting unit's proportionate share of the net pension liability?
Table 1: Schedule of Pension Amounts by Employer provides the net pension liability (non-university or university employers) and the proportionate share of the net pension liability as of the measurement date (Sept. 30) for all employers. These tables are found on the GASB 68 Pension page in the Data Tables tab.
No. The UAAL is calculated based on the actuarial value of assets, while the net pension liability is calculated on the market value of assets. GASB 68 is concerned only with net pension liability. The net pension liability and the unfunded accrued actuarial liability numbers may look very similar but the difference is important in relation to GASB 68.
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.
The FY 2023 and FY 2025 147c(2) one-time deposit payments will not be included in the required contributions by reporting unit (i.e. the basis for determining the proportionate shares), because they are not part of the Actuarially Determined Contribution in the valuation.
For each MPSERS fiscal year (October 1 – September 30), ORS determines the total pension contributions required of all employers and each employer's required pension contributions for that plan year. ORS and its actuary calculate each employer's proportionate share percent by dividing the employer's contributions by the total contributions to MPSERS (calculated separately for universities and non-universities) for that fiscal year. The actuary determines the net pension liability for universities and for non-universities as of the measurement date (September 30) and multiplies the total net pension liability or pension expense by the employer's proportionate share percent. The proportionate share for a given year is based on the prior year's contributions.
The liability is reduced over time through the contribution rates. The pension plan is designed to eliminate the liability over time, like paying off a mortgage on a house. No additional action is required of the employers.
The liability will be paid off according to the amortization of the unfunded liability over time, consistent with past practice. Since the liability itself is a shared liability, individual employers can't pay off their proportionate share.
The pension expense represents the annual cost of the retirement benefit. Each MPSERS employer is required by GASB to record its proportionate share of the pension expense. GASB 68 requires that pension expense be reported using a new method that presents service (normal) cost and other basic expenses (for example the cost of administering the pension plan), as well as amounts recognized each year for deferred inflows of resources (which reduce the pension expense) and deferred outflows of resources (which increase the pension 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 68, depending on a variety of factors. GASB 68 also requires MPSERS employers to record their proportionate share of the pension expense. Refer to the Glossary for a complete list of pension expense items.
MPSERS is a multiple employer cost-sharing plan. The State of Michigan has no employees in this plan and is not a participating employer in the MPSERS plan. The pension liability and pension expense are required to be recorded by each participating employer in the MPSERS plan. The State of Michigan offers retirement benefits for its employees as well and has its own reporting requirements for that plan as a result of GASB 67 and 68, which is reflected in its comprehensive annual financial report. The Office of Retirement Services administers several retirement systems, but each is distinct.
No, the GASB 68 and 75 reporting standards break the link between actuarial funding and financial accounting for pensions and other postemployment benefits (OPEB). Previous GASB standards required pension and OPEB plans to calculate the annual required contribution (ARC) and report payments toward the ARC. This measured the plan's funding of the annual pension and OPEB obligations. GASB standards consider only how pension and OPEB plans account for and report net pension and OPEB liabilities and pension and OPEB expenses. For GASB 68 and 75, ARC is no longer a relevant term.
GASB 68 and 75 are for financial reporting purposes only and do not affect or change funding of retirement costs for reporting units. In addition, 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 68 or 75.
GASB 68 and 75 are for financial reporting purposes only and do not affect or change funding of retirement costs for reporting units. In addition, 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 68 or 75.
Regular payroll reporting has not changed due to GASB 68 or 75.
Rating agencies have been aware of the funding policies and status of governmental pension plans for years. Historically, agencies have incorporated that information into their analysis of an organization's ability to meet its debt obligations.
No. Rate stabilization is related to funding the pension system. GASB 68 and 75 reporting requirements are related to preparing and reporting financial statements.
Discuss this issue with your certified public accountant (CPA) and professional auditor. The full GASB Statements No. 68 and 75, and their accompanying Implementation Guides are available at the GASB website. They are located in a tab on the Pronouncements page under Standards & Guidance. Pronouncements is another word for statements.
Discuss this issue with your certified public accountant (CPA) and professional auditor.
GASB sets rules on how accounting must be done. GASB 68 requires recording net pension liability and pension expense.
Contact ORS Employer Reporting at ORS_Web_Reporting@Michigan.gov.
The Governmental Accounting Standards Board (GASB) Statement No. 75 addresses postemployment benefits other than pensions (other postemployment 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:
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.
GASB 75 is effective for fiscal years beginning after June 15, 2017.
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.
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.
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.
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.
GASB 75 applies only to contributions for the premium subsidy benefit, for which contributions are made to the retiree healthcare fund. The Personal Healthcare Fund (PHF) benefit is a Defined Contribution Plan benefit and isn't affected by GASB 75.
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.
Discuss this issue with your certified public accountant (CPA) and professional auditor. The full GASB Statements No. 68 and 75, and their accompanying Implementation Guides are available at the GASB website. They are located in a tab on the Pronouncements page under Standards & Guidance. Pronouncements is another word for statements.
There are separate sets of data tables for pension and OPEB. Pension data tables are labeled 1-5 and OPEB tables are labeled 6-9. The tables related to pension are found on the GASB 68 section of the website and the tables for OPEB are found on the GASB 75 section.
All data tables have rows for each employer, with the information grouped under headings according to various required types of data.
N stands for non-university employers. K12 Districts, ISDs, Charter Schools/PSAs, Libraries, and Community Colleges should use tables N1 through N9.
U stands for university employers. University employers should use tables U1 through U9.
Table 1 is a schedule of pension amounts by employer. It shows pension contributions, proportionate share percent, net liability, and expense. The information is grouped under headings according to various required types of data.
Table 6 is the same schedule for the OPEB plan.
Tables N1 and U1 are found on the GASB 68 (pension) section of the website and Tables N6 and U6 are found on the GASB 75 (OPEB) section.
Use the appropriate tables for your employer type (N for non-university employers and U for university employers).
Table 2 is a schedule of deferred resources by year by employer for the pension plan. It provides the amounts of deferred resources that will be applied to the pension expense in future years. This information is required in your Notes to the Financial Statement.
Table 7 is the same schedule for the OPEB plan.
Tables N2 and U2 are found on the GASB 68 (pension) section of the website and Tables N7 and U7 are found on the GASB 75 (OPEB) section.
Use the appropriate tables for your employer type (N for non-university employers and U for university employers).
Tables 4 and 9 contain detailed information regarding the recognition of deferred inflows and outflows of resources data provided in Tables 1 and 2.
Tables 3 and 8 contain detailed information regarding the recognition of inflows and outflows of resources provided in Tables 1 and 2 and Tables 6 and 7.
Table 5 provides covered payroll as of Sept. 30, 2024, (the measurement date) and as of June 30, 2025, (the end of the employers' fiscal year). This information is needed to complete the Required Supplementary Information (RSI) schedules. Because this amount is the same for both pension and OPEB, Tables N5 and U5 should be used for both GASB 68 RSI schedules and GASB 75 RSI schedules.
Note: The employers' covered payroll is defined by GASB Statement No. 82 as payroll on which contributions to a pension plan are based; and by GASB Statement No. 85 as payroll on which contributions to the OPEB plan are based. For university employers, covered payroll for both pension and OPEB is the greater of 1) university payroll on which contributions to the plan are based (member and non-member payroll on which UAAL was required) or 2) the required minimum payroll amount required by PA 136 of 2016 (payroll floor). For non-university employers, covered payroll represents payroll on which contributions to both plans are based.
Specific guidance on using the data tables can be found in the Data tabs of the GASB 68 Pension and GASB 75 OPEB pages.
Employers are listed by their Reporting Unit number, not by their Michigan Department of Education Org number. Data is separated by employer type, with all universities in one set of tables and all non-universities (K12 districts, charter schools/PSAs, libraries and community colleges) in another, so it is important to use the correct table for your employer type.
Yes. The tables will be published on this website each year, in time for you to use them to prepare your financial statement. ORS will notify you when all the GASB 68 and 75 materials are ready for use each year.
Financial statements typically include a section titled Notes to the Financial Statement. GASB 68 and 75 require employers to include more information in the notes to the financial statements than in the past.
The Sample Notes to Financial Statements section of this website includes sample language to be used in your financial statements. ORS has presented the information required by GASB 68 and 75 in two notes (Note A – Pension Plan and Note B – OPEB Plan), but this arrangement and division is a suggestion only. GASB Statements 68 and 75 require only that you include the information contained in these sample notes.
You may copy and paste this language from this website, adding information from the tables for your employer where indicated by brackets. ORS provides this suggested language as a courtesy; however, each employer is responsible for its own Notes to Financial Statement and should review the language in these notes with its auditor.
When adapting the sample language provided here, you may replace the phrase “the employer” with the name of your reporting unit.
Beginning with the 2018 fiscal year 100% of the UAAL rate stabilization payment is included in the statutorily required pension contribution and is no longer part of the required OPEB contribution.
Calculate the difference between your net pension or OPEB liability as of Oct. 1, 2023 (from last year’s report) and your net pension/OPEB liability as of Sept. 30, 2024 (Table 5, Column F).
Divide that difference by Column F and multiply by 100 to calculate your percentage increase. If the answer is a negative number, then this is a percentage decrease.
Financial statements typically include a section called Required Supplementary Information. GASB 68 and 75 require the Required Supplementary Information section in financial statements of employers to include more information than in the past. Specifically, it requires four schedules showing a 10-year history of data: two for pension contributions and two for OPEB contributions.
The Required Supplementary Information sections of the GASB website include schedule templates and language to be used in your financial statements.
These schedules will eventually show 10 years of data. The schedule templates ORS has provided are presented to illustrate the requirement to show information for 10 years. However, until a full 10-trend is compiled, you should present information for those years for which information is available. Each subsequent year another column will be populated and the previous years’ information retained, until a full 10-year history is shown. Thereafter, one year will drop off each year as data for a new year is added, and a 10-year history is maintained.
The RSI schedules are presented as PDF documents. You may create your own schedules based on the examples ORS has provided. Each year ORS will provide some of the data required for these tables and you will be required to provide other data. As an employer, you will be responsible for maintaining your reporting unit’s own schedules, retaining data from past years and adding new data each year.
The GASB 68 RSI schedules show data beginning with FY 2014. The GASB 75 RSI schedules show data beginning with FY 2017.
For the purposes of GASB 68 and 75, a covered employee means an employee for whom the employer is required to make contributions to cover the unfunded accrued actuarial liability (UAAL). Use the table below to determine which retirees to include when collecting data for GASB 68 and 75 requirements.
