WASBO ABC / Small Schools Meeting November 19, 2015 GASB 68: Financial Reporting for. Pensions. November 2015

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1 WASBO ABC / Small Schools Meeting November 19, 2015 GASB 68: Financial Reporting for November 2015 Pensions

2 GASBS 68 Pension Update Implementation of GASB 68 Accounting and Financial Reporting for Pension. Effective for Fiscal Years beginning after June 15, A status update on Pensions and new Reporting Requirements Pension Implementation Guidance The New F-196 Process Slide 2

3 Status Update on Pensions Pension Note requires additional disclosures. The Plans descriptive narratives are expanded. New tables added: The Collective Net Pension Liability The Net Pension Liability as of June 30, 2015: Dollars in Thousands Total Pension Liability PERS 1 SERS 2/3 TRS 1 TRS 2/3 $12,789,242 $4,473,428 $9,237,730 $11,220,833 Plan fiduciary net position ($7,558,312) ($4,067,277) ($6,069,588) ($10,377,031) Participating employers net pension liability $5,230,930 $406,151 $3,168,142 $843,802 Plan fiduciary net position as a percentage of the total pension liability 59.10% 90.92% 65.70% 92.48% Slide 3

4 Status Update on Pensions New Pension Note disclosures require School District specific information. The note template has blank tables that need to be filled in by you. June 30, 2015 PERS 1 SERS 2/3 TRS 1 TRS 2/3 District s Annual Contributions Proportionate Share of the Net Pension Liability The District s Contributions reported here will be an audit focus. Slide 4

5 Status Update on Pensions Other District specific information to be added in the pension note includes: The School District s Proportionate Share of the Net Pension Liability (NPL) and changes from the prior period. Allocation percentages PERS 1 SERS 2/3 TRS 1 TRS 2/3 Current year proportionate share of the Net Pension Liability Prior year proportionate share of the Net Pension Liability Net difference percentage Slide 5

6 Status Update on Pensions There are many new elements in the Pension Note: As you prepare your Pension Note, review the document for areas requiring School District specific information. Slide 6

7 Status Update on Pensions The School District s Proportionate Share of the Net Pension Liability is required to be displayed on the Schedule of Long-Term Liabilities (SLTL). On the SLTL, the column, Amounts due within one year in not applicable. School Districts will not recognize the Net Pension Liability on the F-196 Balance Sheet. Slide 7

8 Status Update on Pensions The Net Pension Liability is not reported on the F-196 Balance Sheet. School Districts preparing CAFRs will have reconciling items from the F-196 to their Government-wide Financial Statements. A separate K-20 presentation is being held later this afternoon for the ESDs and the six school district preparing CAFRs Slide 8

9 Status Update on Pensions A fun fact: The Net Pension Liability will not affect a school district s statutory debt limit. A pension liability does not meet the definition of debt under state law. Slide 9

10 Status Update on Pensions The General Fund SLTL is modified to include pensions amounts. Other Liabilities: Wait for it. Beginning Outstanding Debt Amount Issued/ Increased Amount Redeemed/ Decreased Ending Outstanding Debt Amount Due Within One Year Non-Voted notes Not Recorded as Debt C/S 799 XXXX Net Pension Liabilities: Net Pension Liabilities TRS C/S 492 XXXX Net Pension Liabilities TRS 2/ C/S 495 XXXX Net Pension Liabilities SERS 2/ C/S 498 XXXX Net Pension Liabilites PERS C/S 457 XXXX Total Long-Term Liabilities C/S 641 C/S 650 C/S 659 C/S 668 XXXX Slide 10

11 Status Update on Pensions Sorry for the wait The pension information we present in our F- 196s had to be audited first. Since our Fiscal Year End is not the same as the Pension Plan s FYE, we are required to report the most recent Pension information. The new reporting procedures are new for everyone. (DRS, SAO, OSPI) No one had a specific timetable. Slide 11

12 Status Update on Pensions Some Pension Terminology PEFI: Participating Employer Financial Information. A new report published by DRS providing employers with applicable pension information for reporting purposes. The Schedule of Employer Allocations: These are schedules within the PEFI. Employer allocation percentages are based on the employer s contributions as a percentage of total contributions, by plan. Slide 12

13 Status Update on Pensions Pension Terminology The Schedule of Collective Pension Amounts This is additional PEFI information. Employer-specific proportionate shares of the collective net pension liabilities are calculated from these tables. Most of the information contained in the Schedule of Collective Pension Amounts are applicable to employers issuing Full-GAAP Financial Statements. For F-196 purposes, the only applicable figures are the Collective Net Pension Liability figures. Slide 13

14 Status Update on Pensions Pension Terminology The DRS Comprehensive Annual Financial Report (CAFR) The Financial Statements from the Department of Retirement Systems. Descriptive narrative contained in the DRS CAFR Notes, regarding the pension plans, has been included in the new pension note for School District. Data Tables in the DRS CAFR are also required to be displayed in the School Districts pension notes. Certain Tables require District-Specific information to be entered. Slide 14

15 Status Update on Pensions Pension implementation guidance OSPI s Pension Reporting Tool (PRT) The PRT will provide district-specific information for the Schedule of Long- Term Liabilities and the Notes to the Financial Statements. A GAAP/CAFR version of the PRT will be presented at the K-20 later today. Slide 15

16 Pension implementation guidance The Pension Reporting Tool (PRT) for F-196s OCBOA Financial Statements is ready for publication. We have been waiting for all F-196 files to be submitted to OSPI before we release the PRT. Snapshots of the Pension Reporting Tool Slide 16

17 Pension implementation guidance The PRT will function similar to other Tools on the OSPI SAFS website, using the CCDDD # to load district specific pension information. 1. Enter your district s CCDDD# in the cell provided. Enter CCDDD number CCDDD Pension Reporting Tool Tacoma School District 010 ESD Slide 17

18 Pension implementation guidance 2. You are presented with the pension amounts to be reported on the SLTL for the F-196. Pension Reporting Tool Enter CCDDD number CCDDD Tacoma School District Include in the Schedule of Long-Term Liabilities: Proportionate share of the Net Pension Liabilities, by plan: ESD Tacoma School District 010 Beginning Liability Amount Increased Amount Decreased Ending Liability Net Pension Liabilities TRS 1 104,008, ,008,565 Net Pension Liabilities TRS 2/3 27,060,729 27,060,729 Net Pension Liabilities SERS 2/3 12,201,867 12,201,867 Net Pension Liabilities PERS 1 25,000,282 25,000,282 Informational totals only, do not include in SLTL: Pension Totals - 168,271, ,271,443 Slide 18

19 Pension implementation guidance 3. Enter the applicable tables into the Pension Note. Pension Totals - 168,271, ,271,443 The tables below present district-specific pension information to be included in the pension note to the financial statements. The values should be reviewed for accuracy. The District's Proportionate Share of the Net Pension Liability (NPL) At June 30, 2015, the District reported a total liability of $ 168,271,443 for its proportionate shares of the individual plans collective net pension liability. The district's proportionate share of the collective net pension liability is based on annual contributions for each of the employers participating in the DRS administered plans. The District s proportionate share of each plan s collective net pension liability is reported below: June 30, 2015 PERS 1 SERS 2/3 TRS 1 TRS 2/3 District s Annual Contributions 2,196,565 2,920,801 7,346,486 8,522,516 Proportionate Share of the Net Pension Liability 25,000,282 12,201, ,008,565 27,060,729 (This is snapshot information for presentation only) Slide 19

20 Pension implementation guidance 3. Enter the applicable table from the PRT into the Pension Note. At June 30, 2015, the district's percentage of the proportionate share of the collective net pension liability was as follows and the change in the allocation percentage from the prior period is illustrated below: Allocation percentages PERS 1 SERS 2/3 TRS 1 TRS 2/3 Current year proportionate share of the Net Pension Liability Prior year proportionate share of the Net Pension Liability % % % % % % % % Net difference percentage % % % % (This is snapshot information for presentation only) Slide 20

21 Pension implementation guidance 3. Enter the applicable table from the PRT into the Pension Note. The District's Sensitivity of the Net Pension Liability to changes in the Discount Rate Source: DRS CAFR 6/30/2015 Sensitivity of the net pension liability to changes in the discount rate: Participating Plans for TRS, PERS, and SERS 1% Decrease Current Discount Rate 1% Increase (8.50%) (6.50%) (7.50%) PERS1 $6,368,671,000 $5,230,930,000 $4,252,577,000 %NPL % % % District s PERS1 $30,437,909 $25,000,282 $20,324,421 SERS2/3 $1,282,039,000 $406,151,000 ($273,474,000) %NPL % % % District s SERS2/3 $38,515,895 $12,201,867 ($8,215,894) TRS1 $3,982,571,000 $3,168,142,000 $2,467,801,000 %NPL % % % District s TRS1 $130,745,874 $104,008,565 $81,016,710 TRS2/3 $3,570,229,000 $843,802,000 ($1,183,066,000) %NPL % % % District s TRS2/3 $114,497,238 $27,060,729 ($37,940,925) Slide 21

22 Pension implementation guidance 4. Verify Employer Contributions reported in the PEFI and in the PRT. The PEFI and the PRT report the employer s contributions (from July 2014 to June 2015) into the plans. Independent Employer Verification is necessary on these contribution amounts. Business Managers should verify contributions. SAO has describe this as an audit focus. Slide 22

23 Pension implementation guidance Independent Employer Verification: The School District Business Official will need to provide assurance that district-specific annual contribution amounts presented in DRS-provided schedules are reasonably accurate. A school district is solely responsible for its financial statements and in evaluating the district-specific pension information presented. Slide 23

24 Pension implementation guidance Independent Employer Verification Go to the DRS website Find the link at New GASB Standards New standards are coming for pension accounting and reporting. Learn more In the section: FROM DRS eservices Contribution Reconciliation utionreconciliation.pdf Slide 24

25 Pension implementation guidance Independent Employer Verification DRS has published a guide to verify Employer Contributions. A Guide for Employers Using DRS Eservices to verify your Employer Contribution Allocations Monthly transmittals to DRS are detailed here Slide 25

26 Pension implementation guidance 1. You entered your district s CCDDD# in the cell provided on the PRT. 2. You are set to load the pension amounts into the SLTL for the F You have entered the applicable table from the PRT into the Pension Note. 4. You have verified the Employer Contributions reported in the PEFI and in the PRT. Slide 26

27 The New F-196 Reporting Process 5. Load the Pension information into the F-196 during Phase 2: The reason we had to create a second phase of F-196 reporting The pension amounts being reported by school districts needed to agree to the DRS audited plan information. DRS could not provide a firm date as to when their audited information would be available. OSPI had to maintain statutory reporting deadlines. Slide 27

28 The New F-196 Reporting Process We have all completed the F-196 Phase 1: F-196 Reports have been submitted to OSPI. With the exception of Pension Liability amounts on the Schedule of Long-Term Liabilities (SLTL). The reporting deadlines have been met. Slide 28

29 The New F-196 Reporting Process F-196 Phase 2: After the DRS Pension PEFI is audited and released: After OSPI has all Phase 1 versions of the F-196: After OSPI has updated the PRT and tested the data: OSPI will reopen the F-196s for Districts to add Pension information on the Schedule of Long-Term Liabilities (SLTL). Slide 29

30 The New F-196 Reporting Process Phase 2: School Districts will reopen the F-196 Add the Pension information to the Schedule of Long-Term Liabilities in Phase 2 and resubmit. A second Certification Page will be necessary. All other F-196 information will be locked during the Phase 2 process. A Phase 2 deadline is TBD. This two phase reporting procedure will become standard operating procedures until Slide 30

31 The New F-196 Reporting Process Post Phase 2, and Financial Statements: The Pension Note is updated with Plan-Specific information. School Districts compile their district-specific pension data to complete the Pension Note. Business Managers will add District-Specific information in the applicable tables contained in the Pension Note. The Pension Reporting Tool can provide the district-specific information needed for the Note. Slide 31

32 The New F-196 Reporting Process Post Phase 2, and Financial Statements: Review your specific PEFI data from the DRS audited report. Verify your PEFI data to DRS eservices Contribution Reconciliation. It is recommended that you verify the PRT values to the PEFI data. If you notice any discrepancies or have questions regarding the values listed in the PRT, please let me know. Slide 32

33 Questions? Paul Stone Supervisor SD/ESD Accounting Slide 33

Implementing GASB 68

W a s h i n g t o n S t a t e A u d i t o r s O f f i c e Implementing GASB 68 GASB pension statements GASB number Title 78 Non-governmental plans 2016 73 Plans not within the scope of GASB 68 2017 71