1. Pension Regulations Presented by David Maccoux, CPA, Shareholder
December 4, 2014
Presented by David Maccoux, CPA, Shareholder

2. GASB Pronouncements and Effective Dates
GASB Statement No. 67, Financial Reporting for Pension Plans
Effective for fiscal years beginning after June 15, 2013
Establishes pension accounting and financial reporting standards for pension plans, including the Wisconsin Retirement System
GASB Statement No. 68, Accounting and Financial Reporting for Pensions
Effective for fiscal years beginning after June 15, 2014
Establishes pension accounting and financial reporting standards for employers, including all employers participating in the Wisconsin Retirement System
Restatement of beginning net position is required

3. GASB Pronouncements and Effective Dates
GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date
Effective for fiscal years beginning after June 15, 2014
Address contributions to pension plan, when other deferred outflows/inflows of resources are not available

4. GASB’s Purpose
Improve the decision-usefulness of reported pension information
Enhance transparency, consistency and comparability in reporting pension activity between governments, with the total pension liability calculated using specific guidelines

5. Wisconsin Retirement System (WRS)
Cost-sharing multiple-employer defined benefit plan
Pool assets and obligations, meaning that WRS assets can be used to pay the pensions of retirees of any participating employer
Financial statement amounts and related disclosures will be provided by WRS and their consulting actuary
System completes an annual actuarial valuation annually as of December 31st, with valuations generally available by the subsequent June
WRS to allocate net pension liability, pension expense and pension related deferrals based on their share of employer contributions. The allocation will be audited by WRS’s auditor prior to distribution
No impact on funding decisions and contribution amounts
Importance of WRS census data
Employer’s projected long-term contributions to WRS / projected long-term contributions to the plan by all employees

6. Key Implementation Dates for You
Valuation Date
Plan: December 31, 2014
Measurement Date
Plan: December 31, 2014
Employer: December 31, 2014
Reporting Date (1)
Employer: June 30, 2015 or December 31, 2015
(1) GASB 67 requires the plan’s measurement date and reporting date to be the same date while GASB 68 allows you to pick a measurement date no earlier than one year and one day from your reporting date

7. What has changed? GASB Statement No. 27 GASB Statement No. 68
Pension Expense – Contractually required contributions (Funding Approach)
Pension Liability – Unpaid contractual required contributions
GASB Statement No. 68
Pension Expense – Benefits earned by employees (Earnings Approach)
Net Pension Liability or Net Pension Asset – Employers recognize proportionate share of a Plan’s long-term obligation to provide pension benefits compared to the value of the Plan’s assets available to pay pension benefits in accrual financial statements
Additional note disclosures and required supplemental information
Additional deferred inflows/outflows of resources reported

8. Pension Expense
Service cost (anticipated costs attributed to this year’s service) + Interest on total pension liability + Changes in benefits, either enhancements or reductions – Employee contributions – Expected earnings on WRS investments + Administrative expenses – Recognition of change in deferred inflows of resources + Recognition of change in deferred outflows of resources = Pension expense (Accrual basis financial statements)

9. Pension Expense Deferred inflows/outflows of resources
Differences between expected and actual experience with regard to economic or demographic factors (i.e. measurement of the total pension liability)
Changes of assumptions about future economic or demographic factors or of other inputs (experience gains and losses)
Changes in employer’s proportion and differences between employer contributions and employer’s proportionate share of contributions
Net difference between projected and actual earnings on pension plan investments
Amortize deferred inflows/outflows by average remaining years of service of all members of the plan (not just employer)
Amortize investment over 5 years closed

10. Total Pension Liability Calculation
WRS’s consulting actuary
Project total future pension benefit payments for current and former employees
Discount the projected benefit payments to their value at the time of the measurement (present value)
Importance of discount rate
Attribute present value to periods when they were or will be earned
Must use entry age actuarial cost method, applied only as a level percentage of payroll
Discount rate: Long-term expected investment return vs 20 year tax exempt municipal bond rate

11. Allocation of Net Pension Liability
Proportionate share
Allocation of your share of the WRS net pension liability or net pension asset, and other related items
Employer allocation to specific funds
GASB 68 does not require a specific approach to allocating the employer’s proportionate share
NCGA Statement No. 1, paragraph 42 (as amended) indicates that long-term liabilities that are directly related to and expected to be paid from proprietary and fiduciary funds should be reported in their respective fund financial statements

12. Notes to Basic Financial Statements
General Information
Pension plan description
Benefit and contribution information
Pension liability disclosures
Description of proportionate share calculation
Classification of deferred outflows/inflows and 5 year amortization schedule
Actuarial assumptions
Long-term expected real rate of return
Sensitivity of proportionate share of net pension liability to changes in discount rate
+1%/-1% from current discount rate

13. Required Supplementary Information
Schedule of your proportionate share of net pension liability
Employer proportion (percentage and amount) of net pension liability or net pension asset
Employer’s covered-employee payroll
Percentage of the net pension liability or asset to covered-employee payroll
Fiduciary net position as a percentage of total pension liability
Schedule of employer contributions
Contractually required contribution and actual contributions
Contributions as a percentage of covered-employee payroll

14. Any questions? Thank you! David Maccoux, CPA 800-676-0829
Thank you!