1. OPEB ACCOUNTING TRANSACTIONS WASBO Accounting Seminar March, 2007 Presented by: Kathy Guralski, School Finance Auditor Wisconsin Department of Public Instruction

2. Need to know: 1) 1)Timing of contribution 2) 2)Amount of contribution 3) 3)Annual Required Contribution (ARC) amount 4) 4)Current retiree benefits to be paid 5) 5)Implicit rate subsidy 6) 6)Salary OR FTE of employees eligible to receive the benefit

3. Timing of Contribution A contribution to the trust may be made at anytime during the fiscal year but MUST be physically made by June 30 th to be accounted for in that same fiscal year ending June 30 th.

4. Amount of Contribution How a contribution is accounted for and aided will vary depending on the following: A contribution to the trust may be: An amount for the entire unfunded actuarial accrued liability plus normal cost ARC amount Amount less than ARC Amount more than ARC but less than unfunded actuarial accrued liability plus normal cost

5. Annual Required Contribution (ARC) Amount Amount determined by valuation Amortization of Actuarial Accrued Liability Normal Cost

6. Current Retiree Benefits If applicable, what amount your current retirees contribute towards their insurance cost. If applicable, what cost the district incurs for current retirees

7. Implicit Rate Subsidy Insurance rates are blended (one rate for all married, single, etc.) Premium rate paid by retirees may be lower than if retiree were rated separately (actives are subsidizing) GASB requires value of the insurance provided retirees (age related) versus blended rate Difference is implicit subsidy rate

8. Employees eligible to receive the benefit and their salary OR FTE Determine who your employees are within the class that are eligible to receive the postemployment benefit being funded Determine the amount of either their salary or FTE

9. Steps for entries: 1) 1)Allocation of contribution 1) 1) Exhibit B 2) 2)Record contribution in applicable funds 1) 1) Exhibit C, Entries 1 & 2 3) 3)Record contribution in fund 73 1) 1) Exhibit C, #3 4) 4)Record retiree paid portion of insurance premiums 1) 1) Exhibit C, #4 5) 5)Record payment to insurance providers 1) 1) Exhibit C, # 5, #6, #7, #8 & #9 6) 6)Record payment for implicit rate subsidy 1) 1) Exhibit C, #10, #11 & #12

10. Allocation of contribution Only amount up to ARC is eligible for federal/state grants and state categorical aid and may be allocated to appropriate functions Any amount in excess of ARC is to be accounted for in fund 10, function 291000, object 218.

11. Allocation of contribution Exhibit B Determine who your employees are that are eligible for the benefit Determine either the salary OR FTE of the eligible employees Allocate total contribution to appropriate functions of eligible employees in the plan

12. Record Contribution Made from Applicable Funds Contribution may be accounted for as a prepaid made at the beginning of the year, accounted for through the payroll system or as a lump sum payment Exhibit C, Entries 1 & 2 Exhibit A, #3

13. Record Contribution in Fund 73 Exhibit C, Entry 3 Record Retiree Portion of Insurance Premiums Exhibit C, Entry 4

14. Record Payment to Insurance Providers District pays premiums on retirees in combination with active employees Exhibit C, #5 Exhibit C, #7 Exhibit C, #8 Exhibit C, #9 Direct retiree payment from trust to insurance provider Exhibit C, #6

15. Record Payment for Implicit Rate Subsidy Exhibit C, #10 Exhibit C, #11 Exhibit C, #12 Exhibit D

16. BORROWING BY DISTRICT TO FUND OPEB Borrowing by the district to fund OPEB liability is considered refinancing Exhibit F The contribution to the trust made with borrowed funds is not an expenditure for shared cost or categorical aid Principal and interest payments in future years are costs in determining shared costs Exhibit F

17. BORROWING BY TRUST TO FUND OPEB Exhibit F Debt is reported within the trust Investment earnings remain in the trust to be used for future payment of employee benefits

18. DPI CONTACTS Kathy Guralski School Finance Auditor 608-266-3862 kathryn.guralski@dpi.state.wi.us Lori Ames School Administration Consultant 608-266-3464 lori.ames@dpi.state.wi.us