GASB 68
GASB 68 Accounting and Financial Reporting for Pension Audit Committee Meeting Dec 1, 2015 Presented by Accounting & Financial Reporting Department 1 Overview Pension expense annual employer contributions (per plan rates) New financial line items on balance sheet Net pension asset/liability Deferred outflow/inflow of resources Changes in actuarial assumptions Changes in economic and demographic experience Difference between actual and expected investment earnings Changes in proportionate share (cost-sharing plans) Employer contributions made subsequent to the plan's measurement date, but before the Port's fiscal year end (i.e. July 1 to Dec 31 for DRS plans) Other revenue from special funding situation (WA State subsidy) Net position Restricted = Net pension asset Unrestricted = Net pension liability Pension expense no longer ties to employer's contributions to the plan. 2 Defined Benefit Pension Plans Report Pension Type of defined Annual unfunded expense = benefit pension Plan No. of GASB employer pension Employer plan administrator(s) plans Standards contribution liability contribution Washington State Multiple-employer Department of $11 M to 4 GASB 68 Yes No cost-sharing Retirement Systems $12 M (DRS) Multiemployer Various union ED: Project $6 M to 16 No Yes (Taft-Hartley plans) pension trust(s) No. 34-3E $7 M Port of Seattle - GASB 67 Single-employer Warehousemen's 1 $1.5 M Yes No and 68 Pension Trust (WPT) ED = Exposure draft DRS plans include PERS 1, PERS 2/3, LEOFF 1 AND LEOFF 2 GASB 68 applies to DRS and WPT pension plans. 3 2014 Restatement GASB 68 - 2014 restated financials (in millions) Income Stmt Balance Sheet Before - Deferred Deferred Beg Bal 2014 Pension Other Pension Pension Outflow Inflow of Net % of Pension Expense Revenue Asset Liability (Prepaid (Unearned Position Plans Plan Expense expense) revenue) PERS 1 0.84% $ 3.9 $ 4.6 $ 42.4 $ 2.1 $ 5.3 $ (44.8) PERS 2/3 1.00% $ 4.7 $ 3.7 $ 21.1 $ 3.8 $ 22.3 $ (40.6) LEOFF 1 0.07% $ (0.1) $ 0.9 $ 0.3 $ 0.4 LEOFF 2 1.02% $ 1.5 $ (1.1) $ 0.5 $ 13.8 $ 0.8 $ 7.4 $ 5.0 WPT 100% $ 1.5 $ 0.4 $ 11.1 $ 0.2 $ (12.9) TOTAL $ 11.6 $ 7.5 $ 0.5 $ 14.7 $ 74.6 $ 6.9 $ 35.3 $ (92.9) Note: WPT Pension expense is classified as nonoperating expense. Net Position (equity) is reduced by $92.9M as one-time restatement and Pension Expense is decreased by $3.6M under GASB 68. 4 2015 Preliminary Financials GASB 68 - 2015 financials (in millions) Income Stmt Balance Sheet Before - Deferred Deferred 2015 Pension Other Pension Pension Outflow* Inflow % of Pension Expense* Revenue Asset Liability (Prepaid (Unearned Plans Plan Expense* expense) revenue) PERS 1 0.87% $ 4.2 $ 4.2 $ 45.6 $ 2.5 $ 2.5 PERS 2/3 1.09% $ 5.4 $ 5.3 $ 38.8 $ 9.7 $ 10.4 LEOFF 1 0.07% $ (0.2) $ 0.9 $ 0.1 LEOFF 2 1.07% $ 1.6 $ (0.8) $ 0.3 $ 11.0 $ 1.9 $ 3.5 WPT 100% $ 1.5 not available yet TOTAL $ 12.7 $ 8.5 $ 0.3 $ 11.9 $ 84.4 $ 14.1 $ 16.5 * Figures are estimated based on annualized 2015 financial information available through 9/30/15 2015 vs. 2014: 2015 included a $5.2M deferred outflow from changes in actuarial assumptions and changes in experience. Thus, this two years comparison does not suggest a trend in Pension Expense reduction. Pension Expense is decreased by $3.9M under GASB 68. 5 QUESTIONS? 6
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