1. pension accounting and passdown schedules
Sheralin Klinthong, Associate Director, Chancellor’s Office

2. YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
APRIL 2017
Learning Objectives
Understand net pension liability and its importance
Define the three steps in determining total pension liability
Identify the factors contributing to the changes in net pension liability
Assess which factors are included in pension expense immediately and which factors are deferred
Assess usefulness of information in passdown schedule

3. Defined Benefit Pension Plan Structure
YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
APRIL 2017
Defined Benefit Pension Plan Structure
Defined Benefit Pension Plan (CalPERS)
State of California
California State University
Chancellor’s Office
23 Campuses
Other State Agencies
(counties, school districts, etc.)
Other Employers

4. Illustration: Pension Cash Flow
YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
APRIL 2017
Illustration: Pension Cash Flow
Employer (CSU)
Contribution
Pension Fund
(Investments + Earnings)
Benefits
Pension Recipients (employees)

5. YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
Polling Question:
How would you describe your understanding about the pension accounting?
Full understanding
Limited understanding
Not deemed necessary

6. What is Net Pension Liability?
YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
APRIL 2017
What is Net Pension Liability?

7. What is Net Pension Liability?
YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
APRIL 2017
What is Net Pension Liability?

8. What is Net Pension Liability?
YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
APRIL 2017
What is Net Pension Liability?

9. What is Net Pension Liability?
YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
APRIL 2017
What is Net Pension Liability?

10. Measurement of Pension Expense
YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
APRIL 2017
Measurement of Pension Expense
A variety of factors contribute to the changes in net pension liability
Most of the factors are included in pension expense immediately
Certain factors will be deferred and included in pension expense over multiple periods

11. Measurement of Pension Expense (cont.)
YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
APRIL 2017
Measurement of Pension Expense (cont.)
Pension Expense
Amortization: Experience Gain/Loss & Change in Assumptions
CY Employee Service Costs
Interest expense on total pension liability

12. Measurement of Pension Expense (cont.)
YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
APRIL 2017
Measurement of Pension Expense (cont.)
Pension Expense
Amortization: Difference between assumed vs. actual earnings
Employee Contribution
Assumed Interest Earnings

13. Pension Passdown Schedules
YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
APRIL 2017
Pension Passdown Schedules
Annual passdown schedule includes the following:
Rollforward Schedule
Fluctuation Analysis
Pension Journal Entries
Reversal of prior year balances
Set-up the current year balances
Reclassification of current year retirement contribution to deferred outflows of resources
Allocation by Campus – by pensionable compensation
Allocation by CSU Fund – by retirement contribution

14. YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
APRIL 2017

15. Pension Related Fluctuation Analysis
YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
APRIL 2017
Pension Related Fluctuation Analysis
Factors that can result to significant fluctuations:
Employee Service Costs
Investment Earnings
Changes in Assumptions
Change in Proportionate Share (pensionable compensation)
*Fluctuation analysis by campus has been incorporated in the passdown schedule.

16. YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
Polling Question:
Do you find the rollforward and fluctuation analysis useful?
Yes No

17. Disclosure Requirements
YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
APRIL 2017
Disclosure Requirements
Financial Statements
Net Pension Liability
Deferred Outflows and Inflows of Resources
Benefits (i.e. Pension) Expense
Notes to Financial Statements
Provides a more comprehensive and easier to understand picture of the pension liability and expense.
Supplementary Schedules
- Contains pension data for each of the most recent 10 years

18. YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
APRIL 2017
Resources
GAAP Manual Chapter Net Pension Liability
Link: CSU GAAP Accounting Manual
GASB 68 Pension Passdown Schedules
Link: PBC SharePoint Passdown Schedules
SFSR GAAP Team

19. YEAR-END GAAP TRAINING
APRIL 2017
YEAR-END GAAP TRAINING
Questions and Answers