NEWS RELEASE 07/21/08

Norwalk, CT, July 21, 2008—The Governmental Accounting Standards Board (GASB) today issued for comment a proposed Technical Bulletin, Determining the Annual Required Contribution for Postemployment Benefits. This document will clarify that the use of actual known amounts for purposes of calculating the annual required contribution (ARC) adjustment relating to pensions and other postemployment benefits (OPEB) is consistent with the intent of existing standards. The proposed Technical Bulletin will further make clear that use of the known amount in place of the estimation procedure in GASB Statements No. 27, Accounting for Pensions by State and Local Governmental Employers, and No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, is encouraged.

For accounting purposes, the portion of the ARC calculation related to past over- and underpayments already has been recognized in the financial statements, and an adjustment needs to be made to future ARCs to avoid counting that amount twice. Statements 27 and 45 assume that the amount is not known and therefore prescribe a method of estimation that governments are required to use. However, since it has come to the GASB's attention that some actuaries do track that portion of the ARC separately, this proposed Technical Bulletin will clarify that governments may base the ARC adjustment on the actual amount when it is known.

"When our pension standards were enacted, many governments had been funding their plans for years and it was believed that it would be necessary to estimate the ARC adjustment," said Robert H. Attmore, chairman of the GASB. "Since many governments are implementing the OPEB standards essentially with a blank slate, there is a higher likelihood that they will have the actual amounts from the start. We want to accommodate the use of actual numbers when governments have them."

The proposed Technical Bulletin may be downloaded free of charge through the GASB website at http://www.gasb.org/exp. The comment deadline is September 30, 2008.

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.