1. Pensions – Are We There Yet? October 12, 2017
TGFOA
Fall Conference
Pensions – Are We There Yet? October 12, 2017
Jerry E. Durham, CPA, CGFM, CFE

2. The Opinions expressed during this presentation are my own
The Opinions expressed during this presentation are my own. They do not necessarily represent the views of the Tennessee Comptroller of the Treasury, his representatives, or the Tennessee Department of Audit.

3. Implementation Issues
The Real Problem
The other real problem
Information - Sheer complexity and involvement of outside parties
Actuary, auditor, census data Testing, Deferrals, Employer responsibility, Footnotes
Discount Rate
Measurement dates
Multiple plans
Allocations
GASB Statements 71, 73, 78, 82, 85
GASB Statement 84
Uniform Guidance
OPEb

4. The Real Problem

5. The Other Real Problem

6. Effective Dates—June 30 2015 2016 Statement 68—Pensions—Employers
Statement 69—Government Combinations and Disposals of Government Operations
Statement 71—Pension Transition for Contributions Made Subsequent to the Measurement Date
2016
Statement 72—Fair Value Measurement and Application
Statement 73—Pensions—Related Assets (outside scope of Statements 67 and 68)
Statement 76—Hierarchy of GAAP for State/Local Governments
Statement 79 – Certain External Investment Pools and Pool Participants

7. Effective Dates—June 30
2017
Statement 73—Pensions Amendments to Certain Provisions of 67 & 68
Statement 74—Financial Reporting – OPEB Plans
Statement 77—Tax Abatement Disclosures
Statement 78 – Pensions Provided through Certain Multiple-Employer Defined Benefit Plans
Statement 79 – Certain External Investment Pools and Pool Participants
Statement 80 - Blending Requirements for Certain Component Units
Statement 82 – Pension Issues
2018
Statement 75—Accounting and Financial Reporting – OPEB – Employers
Statement 81 – Irrevocable Split-Interest Agreements
Statement 82 – Pension Issues (Certain Provisions related to Assumptions)
Statement 85 – Omnibus 2017
Statement 86 – Certain Debt Extinguishments
2019
Statement 83 - Certain Asset Retirement Obligations
2020
Statement 84 - Fiduciary Activities
2021
Statement 87 - Leases

8. Mission Impossible - Information

9. GASB’S Top Five Five Main Issues in the new standards
1. Placing the Net Pension Liability on the Balance Sheet
2. Decoupling Expense from Funding
3.Accounting for Cost-Sharing Plans
4. Expanding Disclosure Information (Notes & RSI)
5. Timing of Measurements, Effective Dates
Implementation Guide, and AICPA Whitepapers, and 110 pages in AICPA Audit Guide

10. GASB Opening Thoughts
Financial statement recognition and disclosures don’t create pension obligations; instead, they simply make existing obligations more transparent.
Collectively, the changes in Statements 67, 68, and 71, represent major improvements in public pension reporting, and will make pensions more understandable and comparable.
Theoretically speaking then, 73, 78, 82, 84, and 85 do the same thing!

11. Information Types of Plans Census Data, Testing Contributions
Measurement date
Discount rate
Allocations (Special Funding Situations, Contributions on behalf of Employees, Funds, component units, Cost-Sharing plans, Etc.)
Deferrals, Amortization schedules
Actuarial report (Actuary Competence)
value of plan assets

12. Actuary and TCRS Provided Information
Actuarial Certification Letter
Actuarial Report
Journal Entries
Footnotes to Financial Statements, RSI Schedules, RSI Footnotes
Census Data

13. State Audit Provided Information Will Be Provided on LGA Website
Workpapers for Use of Specialist
Examination Engagement Report for Inactive and Retiree Census Data
Opinion Report on Two Cost Sharing Schedules
Opinion Report on Changes in Plan Net Position
Cost-sharing census data testing plan

14. Other information
Employer responsibility Memo or something similar for Each Employer
Cost sharing testwork from cpa firms

15. Discount Rate

16. The Basic Three-Step Approach for Defined Benefit Pensions
For Active and Inactive Employees
1) Project Benefit Payments 25 40 62 80
2) Discount Future Payments
Present Value of Payments
How much money would I
need to invest today to
cover all the expected
Retirement Benefits for
this employee?
TPL
3) Attribute to Employee Service Periods

17. Pension Plan Discount Rate Assumptions
Most states still use 7.5 to 8%, Is this realistic?
Calpers (the largest public fund): Current assumption 7%
Actual results: .6% in 2016
6.9% last three years
5.1% last ten years
7% last 20 years
Are plans taking on more risk to achieve targets? Too much risk?
What responsibility does the auditor have?

18. Measurement Date

19. Timing and Frequency—GASB 68 (Employer)
Possible Approach VD RD
RD = reporting date
VD = actuarial valuation date
MD = measurement date
Each dot is one year MD
Possible Approach MD VD RD
Possible Approach VD MD RD

20. Diverse year end dates Component units Utility Districts
School Districts
Authorities
Charter Schools
ETC.

21. Housing authority letter
xxxxxxxx,
Thank you for your assistance.  I located the you referenced and our auditor has this information.  Our auditor is telling us because the TCRS data currently available is unaudited he has to give us a Qualified Opinion on our 2016 Audit.  According to our auditor this is true for all housing authorities with a year-end date of September 30 or December 31 because there is a 12 month cap on the age of the data and apparently TCRS will not have audited data until after our audit deadline of 9/30/2017.
 Housing Authorities are scored through a Public Housing Assessment System and having a Qualified Opinion on our audit will cause us to automatically lose a point and could lower the score from High Performer Status (90-100) to a Standard Status (70-89) and would cause the authority to lose a High Performer funding bonus.  While it probably will not affect our PHAS status this year it could in future years and may have this effect on other housing authorities now.  Also we would like to have a clean audit with no findings and this finding is beyond our control. 
I just want to notify TCRS and The State of Tennessee of the negative affect this is causing for several if not most housing authorities in Tennessee.
Sincerely,
Xxxxxxx xxxxxxxx, Executive Director
City Housing Authority

22. Multiple Plans

23. Allocations and More Allocations

24. Allocations Funds Enterprise Funds Component units Charter Schools
Special Funding situations
Separately Financed Specific Liabilities
Contributions made on behalf of employees
On-Behalf payments

25. Recalculating

26. GASB Recalculating
73, 78, 82

27. Accounting and Financial Reporting for Pensions and Related Assets that are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68 73

28. Pensions Not In Scope of 68
Do you Participate in a pension Plan other than TCRS? Yes ____ No __X__ ?
Do you make pension contributions on behalf of different funds (e.g. General Fund for Utility Fund) or other governments! Yes ____ No __X__ ?
If No, GASB 73 does not apply to you.
Pronouncements
IMPORTANT NOTICE Certain GASB pronouncements available below may be completely superseded by the issuance of subsequent GASB Pronouncements and are marked accordingly on the title page and download caption. Additionally, certain pronouncements have been partially superseded or amended by subsequent GASB Pronouncements; such subsequent modifications are not marked in the PDF files of the originally issued pronouncements included on this webpage. The GASB Pronouncements included on this webpage are intended as a general reference to the GASB accounting standards; however, other GASB materials are not available for download, including the GASB Codification, which presents by topic, the standards as amended, and Implementation Guides, which provide authoritative answers to commonly asked questions, are integral to the understanding of the financial reporting requirements for state and local governments. Those publications not currently posted for downloading are available at the GASB Store. The following pronouncements are available for download: Statements of Governmental Accounting Standards
Concepts Statements
GASB Interpretations
GASB Technical Bulletins

29. Pensions Not Administered through Trusts
Summary – 6/30/17
Same purpose as if there were a Trust Arrangement
Only difference is, you don’t have Fiduciary Net Position because you can’t Net the Plan Assets against the Plan Pension Liability
Apply provisions of 67 and 68 in terms of calculations
Just don’t net assets and liabilities, and
Use a discount rate for a High-Grade Municipal Rate

30. Pensions Not Administered through Trusts
Summary – 6/30/17
Same purpose as if there were a Trust Arrangement
Only difference is, you don’t have Fiduciary Net Position because you can’t Net the Plan Assets against the Plan Pension Liability
Apply provisions of 67 and 68 in terms of calculations
Just don’t net assets and liabilities, and
Use a discount rate for a High-Grade Municipal Rate

31. Pensions Provided Through Certain Multiple-Employer Defined Benefit Pension Plans78

32. Pensions Not In Scope of 68
Do you Participate in a pension Plan other than TCRS? Yes ____ No __X__ ?
If No, GASB 78 does not apply to you.
Pronouncements
IMPORTANT NOTICE Certain GASB pronouncements available below may be completely superseded by the issuance of subsequent GASB Pronouncements and are marked accordingly on the title page and download caption. Additionally, certain pronouncements have been partially superseded or amended by subsequent GASB Pronouncements; such subsequent modifications are not marked in the PDF files of the originally issued pronouncements included on this webpage. The GASB Pronouncements included on this webpage are intended as a general reference to the GASB accounting standards; however, other GASB materials are not available for download, including the GASB Codification, which presents by topic, the standards as amended, and Implementation Guides, which provide authoritative answers to commonly asked questions, are integral to the understanding of the financial reporting requirements for state and local governments. Those publications not currently posted for downloading are available at the GASB Store. The following pronouncements are available for download: Statements of Governmental Accounting Standards
Concepts Statements
GASB Interpretations
GASB Technical Bulletins

33. Pensions Not In Scope of 68
Do you Participate in a pension Plan that is a union Pension plan rather than a government sponsored pension plan? Yes __X__ No ____ ?
If Yes, GASB 78 does apply to you.
This should have a effect on very few in the audience.
Pronouncements
IMPORTANT NOTICE Certain GASB pronouncements available below may be completely superseded by the issuance of subsequent GASB Pronouncements and are marked accordingly on the title page and download caption. Additionally, certain pronouncements have been partially superseded or amended by subsequent GASB Pronouncements; such subsequent modifications are not marked in the PDF files of the originally issued pronouncements included on this webpage. The GASB Pronouncements included on this webpage are intended as a general reference to the GASB accounting standards; however, other GASB materials are not available for download, including the GASB Codification, which presents by topic, the standards as amended, and Implementation Guides, which provide authoritative answers to commonly asked questions, are integral to the understanding of the financial reporting requirements for state and local governments. Those publications not currently posted for downloading are available at the GASB Store. The following pronouncements are available for download: Statements of Governmental Accounting Standards
Concepts Statements
GASB Interpretations
GASB Technical Bulletins

34. Exception - Certain Pension Plans
During the implementation of Statement 68 an issue arose regarding the ability of state and local governmental employers to obtain necessary information related to pensions that are provided through “certain” multiple- employer defined benefit pension plans. The objective of this Statement is to address that issue.
Difficult or impossible to get information
Pronouncements
IMPORTANT NOTICE Certain GASB pronouncements available below may be completely superseded by the issuance of subsequent GASB Pronouncements and are marked accordingly on the title page and download caption. Additionally, certain pronouncements have been partially superseded or amended by subsequent GASB Pronouncements; such subsequent modifications are not marked in the PDF files of the originally issued pronouncements included on this webpage. The GASB Pronouncements included on this webpage are intended as a general reference to the GASB accounting standards; however, other GASB materials are not available for download, including the GASB Codification, which presents by topic, the standards as amended, and Implementation Guides, which provide authoritative answers to commonly asked questions, are integral to the understanding of the financial reporting requirements for state and local governments. Those publications not currently posted for downloading are available at the GASB Store. The following pronouncements are available for download: Statements of Governmental Accounting Standards
Concepts Statements
GASB Interpretations
GASB Technical Bulletins

35. Exception - Certain Pension Plans
GASB’s Solution:
Remove these plans from the scope of gASB 68. GASB 68 no longer applies to these plans.
Utilize an old approach
Pronouncements
IMPORTANT NOTICE Certain GASB pronouncements available below may be completely superseded by the issuance of subsequent GASB Pronouncements and are marked accordingly on the title page and download caption. Additionally, certain pronouncements have been partially superseded or amended by subsequent GASB Pronouncements; such subsequent modifications are not marked in the PDF files of the originally issued pronouncements included on this webpage. The GASB Pronouncements included on this webpage are intended as a general reference to the GASB accounting standards; however, other GASB materials are not available for download, including the GASB Codification, which presents by topic, the standards as amended, and Implementation Guides, which provide authoritative answers to commonly asked questions, are integral to the understanding of the financial reporting requirements for state and local governments. Those publications not currently posted for downloading are available at the GASB Store. The following pronouncements are available for download: Statements of Governmental Accounting Standards
Concepts Statements
GASB Interpretations
GASB Technical Bulletins

36. Exception - Certain Pension Plans
Certain Pension Plans - Criteria:
Provided to employees of state or local governmental employers through a Cost-Sharing Multiple-Employer defined benefit pension plan.
That is not a state or local governmental pension plan
That is used to provide defined benefit pensions both to employees of state and local governmental employers and to employees of employers that are not state and local governmental employers
That has no predominant state or local governmental (either individually or collectively with other state or local governmental employers that provide pensions through the pension plan
Pronouncements
IMPORTANT NOTICE Certain GASB pronouncements available below may be completely superseded by the issuance of subsequent GASB Pronouncements and are marked accordingly on the title page and download caption. Additionally, certain pronouncements have been partially superseded or amended by subsequent GASB Pronouncements; such subsequent modifications are not marked in the PDF files of the originally issued pronouncements included on this webpage. The GASB Pronouncements included on this webpage are intended as a general reference to the GASB accounting standards; however, other GASB materials are not available for download, including the GASB Codification, which presents by topic, the standards as amended, and Implementation Guides, which provide authoritative answers to commonly asked questions, are integral to the understanding of the financial reporting requirements for state and local governments. Those publications not currently posted for downloading are available at the GASB Store. The following pronouncements are available for download: Statements of Governmental Accounting Standards
Concepts Statements
GASB Interpretations
GASB Technical Bulletins

37. Exception - Certain Pension Plans
Certain Pension Plans - Solution:
Requirements apply whether the government’s financial statements are presented in stand-alone financial reports or are included in the financial reports of another government
Pension expense should be recognized equal to the employer’s required contributions to the pension plan for the reporting period, and a payable should be reported for unpaid required contributions at the end of the reporting period
The only Pension Liability that will be presented is the amount of any unpaid required contributions
Pronouncements
IMPORTANT NOTICE Certain GASB pronouncements available below may be completely superseded by the issuance of subsequent GASB Pronouncements and are marked accordingly on the title page and download caption. Additionally, certain pronouncements have been partially superseded or amended by subsequent GASB Pronouncements; such subsequent modifications are not marked in the PDF files of the originally issued pronouncements included on this webpage. The GASB Pronouncements included on this webpage are intended as a general reference to the GASB accounting standards; however, other GASB materials are not available for download, including the GASB Codification, which presents by topic, the standards as amended, and Implementation Guides, which provide authoritative answers to commonly asked questions, are integral to the understanding of the financial reporting requirements for state and local governments. Those publications not currently posted for downloading are available at the GASB Store. The following pronouncements are available for download: Statements of Governmental Accounting Standards
Concepts Statements
GASB Interpretations
GASB Technical Bulletins

38. Pension Issues 82

39. Pension Issues Practice Issue – Pension Issues
Three Issues Covered – Items covered in accountant Therapy:
The presentation of payroll-related measures in Required Supplementary Information
Deviations from Actuarial Standards of Practice for financial reporting purposes
Classification of payments made to employers to satisfy employee contribution requirements
Pronouncements
IMPORTANT NOTICE Certain GASB pronouncements available below may be completely superseded by the issuance of subsequent GASB Pronouncements and are marked accordingly on the title page and download caption. Additionally, certain pronouncements have been partially superseded or amended by subsequent GASB Pronouncements; such subsequent modifications are not marked in the PDF files of the originally issued pronouncements included on this webpage. The GASB Pronouncements included on this webpage are intended as a general reference to the GASB accounting standards; however, other GASB materials are not available for download, including the GASB Codification, which presents by topic, the standards as amended, and Implementation Guides, which provide authoritative answers to commonly asked questions, are integral to the understanding of the financial reporting requirements for state and local governments. Those publications not currently posted for downloading are available at the GASB Store. The following pronouncements are available for download: Statements of Governmental Accounting Standards
Concepts Statements
GASB Interpretations
GASB Technical Bulletins

40. Pension Issues Practice Issue – Pension Issues
The presentation of payroll-related measures in Required Supplementary Information
“Covered Payroll” is the portion of compensation paid to active employees on which contributions to a pension plan are based, and upon which certain RSI ratios calculated (Often referred to Pensionable payroll)
“Covered employee payroll” is the payroll of employees that are provided with pensions through the pension plan (total payroll)
Pronouncements
IMPORTANT NOTICE Certain GASB pronouncements available below may be completely superseded by the issuance of subsequent GASB Pronouncements and are marked accordingly on the title page and download caption. Additionally, certain pronouncements have been partially superseded or amended by subsequent GASB Pronouncements; such subsequent modifications are not marked in the PDF files of the originally issued pronouncements included on this webpage. The GASB Pronouncements included on this webpage are intended as a general reference to the GASB accounting standards; however, other GASB materials are not available for download, including the GASB Codification, which presents by topic, the standards as amended, and Implementation Guides, which provide authoritative answers to commonly asked questions, are integral to the understanding of the financial reporting requirements for state and local governments. Those publications not currently posted for downloading are available at the GASB Store. The following pronouncements are available for download: Statements of Governmental Accounting Standards
Concepts Statements
GASB Interpretations
GASB Technical Bulletins

41. Required Supplementary Information
Net Pension Liability
Covered Payroll
Note: Only 5 years are presented here; 10 years of information would be required 41

42. Required Supplementary Information
Employer Contributions
Covered Payroll
Note: Only 5 years are presented here; 10 years of information would be required 42

43. Pension Issues Practice Issue – Pension Issues #2
Deviations from Actuarial Standards of Practice for financial reporting purposes:
The Statement would clarify that a deviation, as the term is used in Actuarial Standards of Practice, is not considered to be in conformity with the requirements of Statements 67, 68, and 73 for the selection of assumptions in determining the total pension liability
Pronouncements
IMPORTANT NOTICE Certain GASB pronouncements available below may be completely superseded by the issuance of subsequent GASB Pronouncements and are marked accordingly on the title page and download caption. Additionally, certain pronouncements have been partially superseded or amended by subsequent GASB Pronouncements; such subsequent modifications are not marked in the PDF files of the originally issued pronouncements included on this webpage. The GASB Pronouncements included on this webpage are intended as a general reference to the GASB accounting standards; however, other GASB materials are not available for download, including the GASB Codification, which presents by topic, the standards as amended, and Implementation Guides, which provide authoritative answers to commonly asked questions, are integral to the understanding of the financial reporting requirements for state and local governments. Those publications not currently posted for downloading are available at the GASB Store. The following pronouncements are available for download: Statements of Governmental Accounting Standards
Concepts Statements
GASB Interpretations
GASB Technical Bulletins

44. Pension Issues Practice Issue – Pension Issues #3
Does the government Pick-up any payments that the plan officially designates as employee contributions. Yes ____ No __X__ ?
If no, this part of GASB 82 will not apply to you.
Do we have anyone here that does pick-up employee contributions??
Pronouncements
IMPORTANT NOTICE Certain GASB pronouncements available below may be completely superseded by the issuance of subsequent GASB Pronouncements and are marked accordingly on the title page and download caption. Additionally, certain pronouncements have been partially superseded or amended by subsequent GASB Pronouncements; such subsequent modifications are not marked in the PDF files of the originally issued pronouncements included on this webpage. The GASB Pronouncements included on this webpage are intended as a general reference to the GASB accounting standards; however, other GASB materials are not available for download, including the GASB Codification, which presents by topic, the standards as amended, and Implementation Guides, which provide authoritative answers to commonly asked questions, are integral to the understanding of the financial reporting requirements for state and local governments. Those publications not currently posted for downloading are available at the GASB Store. The following pronouncements are available for download: Statements of Governmental Accounting Standards
Concepts Statements
GASB Interpretations
GASB Technical Bulletins

45. Employer-Paid Member Contributions
GASBS 67, Footnote 2—In some circumstances, contributions are made by the employer to satisfy plan member contribution requirements. If the contribution amounts are recognized by the employer as salary expense, those contributions should be classified as plan member contributions for purposes of this Statement. Otherwise, those contributions should be classified as employer contributions. (same description in 68 & 73 considered employer contributions)
Pension Expense Definition – Using footnote 2 would result in a change in pension expense.
Consideration for Cost-sharing plans in determination of allocation of NPL, Deferred Outflows/Inflows, & Pension Expense.

46. GASB 84 Fiduciary Activities

47. Questions?
Jerry E. Durham, CPA, CGFM, CFE