1. 1 Your Tilted Balance Sheet – GASB 68 Overview Presented by: Kevin S. Wong, CPA Gilbert Associates, Inc. kswong@gilbertcpa.com September 12, 2013

2. 2 Background and Overview Background Project initiated in January 2006 Exposure draft issued June 2011 Final standard issued June 2012

3. 3 Background and Overview (Continued) Overview Amends current GASB requirements that focus more on required contributions

4. 4 Background and Overview (Continued) Implementation date  Fiscal years beginning after June 15, 2014 (years ending June 30, 2015, December 31, 2015)

5. 5 Big Picture – why? 1.Better transparency, consistency, and comparability with regard to pension costs No more “kicking the can down the road” Changes focus from a “funding” approach to “earnings” approach Liability for benefits “earned” vs. contributions “paid”

6. 6 Big Picture – why? (Continued) 2.Recognition of the entire net pension liability 3.A more comprehensive measure of pension expense 4.Pension Actuaries full employment act

7. 7 Required Calculations a.Net Pension Liability b.Pension expense c.Pension-related deferred outflows/inflows

8. 8 What kind of plan do you have? Single employer Benefits the employees of only one employer Agent multiple employer Assets are pooled for investment purposes but legally segregated

9. 9 What kind of plan do you have? (Continued) Cost-sharing, multiple employer Participating employers pool their pension obligations Plan assets can be used to pay any participating employer’s pension Most JPA staff participate in CalPERS’ 2.0% or 2.7% at 55 Miscellaneous pool

10. 10 What kind of plan do you have? (Continued) Impact to the financial statements is based on the plan type: i.Single-employer and Agent-employer Plans 100% recognition ii.Cost-sharing multiple employer Plans Recognize their proportionate share

11. 11 Required Calculations–Net Pension Liability (Total Pension Liability) – (Pension Plan’s Net Position) = Net Pension Liability Determined as of no earlier than sponsoring entity’s prior fiscal year end (“measurement date”) Approach based on a “benefits-earned” rather than a “funding-due” perspective

12. 12 Determining Total Pension Liability (TPL-PNP=NPL) Definition The portion of the actuarial present value of projected benefit payments that is attributed to past periods of employee service (what has been “earned”)

13. 13 Determining Plan Net Position (TPL-PNP=NPL) Measured at the measurement date Same valuation methods used by the Plan

14. 14 Determining Net Pension Liability (TPL-PNP=NPL) Total Pension Liability – Plan Net Position = Net Pension Liability

15. 15 Pension Expense Changes in Net Pension Liability Incremental recognition of:  Differences between expected and actual Economic or demographic factors Investment earnings  Changes in assumptions

16. 16 Pension-related deferred outflows/inflows Unrecognized items not yet charged to pension expense Contributions from the employer after measurement date but before reporting period

17. 17 Note Disclosures 1. Description of the pension plan 2.Assumptions used to measure total pension liability Detailed disclosures about the discount rate

18. 18 Note Disclosures (Continued) 3.The pension Plan’s fiduciary net position Can refer to Plan’s report Plan’s basis of accounting 4.Brief description of changes in benefit terms and assumptions since prior measurement date

19. 19 Note Disclosures (Continued) 5.Measurement date and date of the actuarial valuation 6.Employer’s policy for determining actual contributions to the plan

20. 20 Note Disclosures (Continued) 7.If not separately disclosed in the financial statements, disclose aggregate: a.Net pension liabilities b.Deferred pension outflows/inflows c.Pension expense for the period

21. 21 Note Disclosures (Continued) Components of deferred pension inflows and outflows, Schedule of anticipated recognition of pension expense of deferred outflows/inflows for the next five years.

22. 22 Note Disclosures (Continued) Additional disclosures for each Single-Employer or Agent Multiple-Employer Plan Detail of changes in a schedule of changes in net pension liability

23. 23 Note Disclosures (Continued) Additional disclosures for Cost-Sharing Multiple- Employer Plans The employer’s proportion (amount and percentage) of the collective net pension liability

24. 24 Note Disclosures (Continued) Additional disclosures for Cost-Sharing Multiple- Employer Plans (Continued) The amounts of the net pension liability, deferred pension outflows and inflows, and pension expense recognized in the financial statements for each cost-sharing plan

25. 25 Required Supplementary Information a.Ten-year schedule of changes in net pension liability (single-employer or agent multiple- employer plan only) b.Ten-year schedule of components of net pension liability and covered payroll c.Ten-year schedule of related contributions

26. 26 Required Supplementary Information (Continued) d.Notes to required schedules i.Information about factors that significantly affect the identification of trends in the amounts reported ii.Significant methods and assumptions used in determining actuarially calculated employer contributions

27. 27 Effective date and transition Effective for financial statement periods beginning after June 15, 2014 Earlier application is encouraged

28. 28 What Should I Do Now??? Know the overview of changes GASB Pension Podcast Series (Dec 2012) Familiarize yourself with your plan Enlist the help of CalPERS July 26, 2013 memo re: assistance Begin educating stakeholders