1. NASACT Teleconference: The New Statistical Section Dean Michael Mead, GASB The opinions expressed here are those of the presenter. Official positions of the GASB are established only after thorough due process and deliberation.

2. Overview Reasons for the new standards A whirlwind tour of the new standards Implementation issues

3. Reasons for the New Standards Prior standards in place for 25 years A lot has changed since then, including Statement 34 Prior standards provided no detail Standards were geared toward general purpose local governments

4. Five Categories of Statistical Section Information Financial trends Revenue capacity Debt capacity Demographic and economic Operating

5. Financial Trends Four types of information: –Net assets –Changes in net assets –Fund balances –Changes in fund balances

6. Revenue Capacity Most significant own-source revenue Four types of information: –Revenue base –Direct and overlapping rates –Principal payers –Levies and collections

7. Debt Capacity Five types of information: –Ratios of total outstanding debt –Ratios of general debt outstanding –Overlapping debt –Debt limits –Pledged-revenue coverage

8. Demographic and Economic Two types of information: –Demographic and economic indicators –Principal employers

9. Operating Three types of information: –Government employees –Operating indicatorsdemand or level of service –Capital asset indicatorsvolume, usage or nature

10. Sources, Assumptions and Methodologies If it doesnt come from another part of the financial report (statements, notes, RSI), then source it Explain any assumptions you make or methodologies you employ to produce information

11. Narrative Explanations Schedules are more understandable and useful when accompanied by explanations Use professional judgment to determine if narrative explanations are needed Generally four types: –Objectives of information and schedules –Unfamiliar concepts –Relations among schedules and with other parts of CAFR –Atypical trends and anomalous data

12. Effective Date &Transition Provisions Effective for periods beginning after June 15, 2005 Retroactive reporting encouraged, but not required Retroactive reporting of new government-wide information back to year of Statement 34 implementation encouraged, but not required

13. Effective Date &Transition Provisions Revision of prior information changed by the Statement is encouraged, but not required –Should at least identify change

14. Implementation Guidance Q&A guide now available Over 120 questions and answers Includes illustrations of complete statistical sections for: –Local government– County government –State government– School district –Airport– Public University –Water & sewer utility– Library district –Retirement system

15. Implementation Issues Highly complicated rate structures may make presentation difficult Possible solutions: –Use multiple schedules –Focus on characteristics of rate structure that vary –Present a portion of rate structure with the most significant impact on determining the rates applied –Add effective tax rates

16. Implementation Issues Individual income tax filers cannot be identifiedhow can principal payers be presented? –Present amount paid (or portion of revenue base) and percentage of total for each payer, but without identifying them –Provide other information that conveys degrees of concentration in sources of revenue

17. Implementation Issues What if personal income information is not available? –If not available at all, use estimated actual value of taxable property or another relevant economic base to calculate debt ratios –If not available for most recent years, implementation guide offers suggestions, such as using tentative data (which should be properly noted) –In general, unavailable data should be indicated as such, not simply left out

18. Implementation Issues What if the required demographic and economic information is not available? –Implementation guide offers suggestions, such as: Presenting information for closely overlapping jurisdictions Looking for other sources Estimation (methodologies for estimation should be described) Presenting other useful information

19. Implementation Issues The state department of labor wont identify individual employers –Implementation guide offers suggestions, such as: Employment numbers of largest employers, but without identification Obtain from another source, such as a chamber of commerce Provide other information that conveys degrees of concentration within the economy

20. Implementation Issues Q: Do we have to start collecting operating indicators and capital asset statistics? A: No. Standard specifically requires available measures. But many measures should be readily available from a governments departments or agencies, which use them to manage operations.

21. Implementation Issues Q: What if we dont have employee, operating, and capital asset information by functional, programmatic, or identifiable activity expense category? A: Show it differently if it will result in a more meaningful presentation to the user of the statistical section

22. Implementation Issues Q: Do pension and OPEB plans have to present both the schedules specifically required for them and the generally required schedules? A: Only if the latter schedules are applicable. For example, if a plan has debt, it does the debt capacity schedules. –Plans may present the other schedules optionally

23. Implementation Issues Q: If a government has a pension or OPEB plan, does it have to present the schedules required for those plans? A: No. Those schedule are required only for the separately issued reports of the plans –However, a government may present them optionally, particularly if the plans do not prepare a statistical section

24. Implementation Issues Q: Does prior information have to be revised to conform to new requirements? A: No. GASB encourages revision, but minimally requires prospective implement- ation. However, prior information cannot simply be dropped. –If implementing prospectively, government should identify point at which information changes and describe nature of the differences

25. Questions? Telephone(203) 956-5294 E-maildmmead@gasb.org Web sitewww.gasb.org