NEWS RELEASE 06/26/09

GASB Issues Two Exposure Drafts on OPEB Measurements and Chapter 9 Bankruptcies

Norwalk, CT, June 26, 2009—The Governmental Accounting Standards Board (GASB) today issued two Exposure Drafts (EDs) of proposed Statements, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans, and Accounting and Financial Reporting for Chapter 9 Bankruptcies. The EDs contain proposals intended to improve consistency in the financial reporting and the measurement of retiree health insurance and other postemployment benefits (OPEB) and the effects of Chapter 9 bankruptcy. Users and preparers of state and local governmental financial reports are encouraged to review and provide comment on the proposed Statements.

The proposed Statement on OPEB measurements addresses issues related to measurement of OPEB obligations by employers participating in agent multiple-employer OPEB plans, and would amend Statement No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, and Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. (In agent multiple-employer plans, separate liabilities are calculated and separate asset accounts are kept for each participating government, rather than being administered and accounted for as a single plan as is done in a cost-sharing plan.) Specifically, it addresses the circumstances in which certain agent employers are eligible to use the alternative measurement method; the requirement that a defined benefit OPEB plan obtain an actuarial valuation; and requirements in Statements 43 and 45 regarding the frequency and timing of determining OPEB measures by agent multiple-employer plans and participating employers.

The proposed Statement on Chapter 9 bankruptcies would provide guidance for state and local governments that have petitioned for protection from creditors by filing for bankruptcy under Chapter 9 of the United States Bankruptcy Code. It would establish requirements for recognizing and measuring the effects of the bankruptcy process on assets and liabilities, and for classifying changes in those items and related costs.

“With the current economic environment putting stress on state and local government resources, it became necessary for the GASB to address the financial reporting issues associated with local governments filing for bankruptcy protection under Chapter 9,” said Robert Attmore, chairman of the GASB.

“By issuing these EDs, the GASB is directly addressing issues raised by practitioners and users of governmental financial statements,” stated Mr. Attmore. “We encourage constituents of the GASB to review the proposals and provide their feedback.”

The EDs can be downloaded free of charge at www.gasb.org. The deadline for written comments on both documents is August 28, 2009.


About the Governmental Accounting Standards Board

The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the Board’s diverse constituency, including preparers and auditors of government financial statements, users of those statements, and members of the academic community. More information about the GASB can be found at its website, www.gasb.org.


About the Governmental Accounting Standards Board

The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the Board's diverse constituency, including preparers and auditors of government financial statements, users of those statements, and members of the academic community. More information about the GASB can be found at its website www.gasb.org.