Public Employees Retirement Association of Minnesota GASB 68 Webinar: Employers’ Road Map to Successful Implementation July 23, 2015 Presented by the Public.
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Public Employees Retirement Association of Minnesota
GASB 68 Webinar: Employers’ Road Map to Successful Implementation
July 23, 2015
Presented by the Public Employees Retirement Association
Hosted by the League of Minnesota Cities
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Public Employees Retirement Association of Minnesota
GASB 68 Webinar: Employers’ Road Map to Successful Implementation
Presenters:
Dave DeJonge,
PERA Interim Executive Director
Jim Riebe,
PERA Principal Accounting Officer
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Public Employees Retirement Association of Minnesota
AgendaAt the completion of this webinar, participants will:
Know where to find and how to use the GASB 68 information PERA has prepared for employers.
Be able to prepare: Journal entries to incorporate pension amounts into government-
wide financial statements; Extensive employer pension footnote disclosures; and Two required supplementary information pension schedules.
Understand the employer’s and employer auditor’s responsibilities for the pension information.
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Public Employees Retirement Association of Minnesota
GASB 68 Overview (1 of 2)Employers report their proportionate share of collective
net pension liability, deferred inflows of resources and deferred outflows of resources, and pension expense on their government-wide financial statementsGASB 67/68 pension amounts calculated by PERA’s actuary
Pension expense calculated as change in net pension liability during the year, plus or minus amortization of deferred inflows and outflows
Pension expense no longer based on contributions to the plan
Employer’s proportionate share calculated by PERA based on employer’s contributions at the measurement date as a percentage of plan contributions from all employers
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Public Employees Retirement Association of Minnesota
GASB 68 Overview (2 of 2)
Significantly more footnote disclosuresDisclosures required for each plan
PERA will provide suggested footnote templates
Required supplementary informationTen-year schedule of employer’s proportionate share
of the net pension liability (prospectively applied)
Ten-year schedule of employer contributions (option to provide ten years of information at transition or to apply requirement prospectively)
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Public Employees Retirement Association of Minnesota
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Public Employees Retirement Association of Minnesota
GASB 67/68 Actuarial Information
Gabriel, Roeder, Smith prepares two valuation reports for each planGASB 67/68 compliant valuation
Funding valuation
Use GASB 67/68 report to verify collective
pension amounts, NPL +/- 1% sensitivity
analysisGASB 67/68 valuation includes a NPL reconciliation
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Public Employees Retirement Association of Minnesota
Schedule of Employer AllocationsSchedule of Employer Allocations (General Employees Retirement Fund)
As of June 30, 2014
Unit ID Employer Name Contributions Allocation %0002-00 AITKIN COUNTY $598,540 0.1573%0006-00 ANOKA COUNTY 6,356,610 1.67010008-01 BECKER COUNTY 814,665 0.21400010-00 BELTRAMI COUNTY 932,224 0.24990012-00 BENTON COUNTY REVENUE 672,279 0.17660014-00 BIG STONE COUNTY 186,634 0.04900016-00 BLUE EARTH COUNTY 1,333,636 0.35040018-00 BROWN COUNTY 683,227 0.17950020-00 CARLTON COUNTY 1,020,241 0.26810022-00 CARVER COUNTY 2,114,127 0.55550022-09 CARVER COUNTY HISTORICAL SOCIETY 9,979 0.00260024-00 CASS COUNTY 849,624 0.22320026-00 CHIPPEWA COUNTY 338,518 0.09680027-00 CHIPPEWA COUNTY SWCD 9,983 0.00260028-00 CHIPPEWA COUNTY HOSPITAL 980,100 0.25750030-00 CHISAGO COUNTY 1,051,266 0.2762… … … …1855-30 MINNETONKA ISD-276 1,332,949 0.3502… … … …
$380,612,334 100.00000%
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Public Employees Retirement Association of Minnesota
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PERA Contributions Reconciliation
Public Employees Retirement Association of Minnesota
General Employees Retirement PlanReconciliation of Employer Proportionate Share Contributions to Employer Financial Statement Contributions
For the Year Ended June 30, 2014
Revenue Code 4000 4005 YE 2013 YE 2014 Subtotal Subtotal Total
Employer Unit No. Employer Name
Employer Contributions -
Matching (6.25 or 6.5%)
Employer Contribution -
Additional (1%)
Adjustment for Employer
Accrual (Received in Current FY
but Recognized in
Prior FY)
Adjustment for Employer
Accrual (Received in Future FY
but Recognized in Current
FY)
Employer Contributions Allocated for
GASB 68
Employer Contributions NOT Allocated for GASB 68
(Omitted Deductions,
Member Buybacks, Employer
Portion Paid by Employee, Interest)
Employer Contributions
Amount Reported on
CAFR
0002-00AITKIN COUNTY $535,331 $85,649 $22,440 $598,540 $0 $598,540
0006-00ANOKA COUNTY $5,477,764 $876,443 $241,438 $243,840 $6,356,610 $358 $6,356,968
0008-01BECKER COUNTY $702,298 $112,368 $814,665 $316 $814,981
0010-00BELTRAMI COUNTY $803,641 $128,583 $932,224 $0 $932,224
0012-00BENTON COUNTY REVENUE $579,551 $92,728 $672,279 $0 $672,279
0014-00BIG STONE COUNTY $160,891 $25,742 $186,634 $0 $186,634
0016-00BLUE EARTH COUNTY $1,149,687 $183,949 $1,333,636 $0 $1,333,636
0018-00BROWN COUNTY $588,987 $94,239 $683,227 $0 $683,227
0020-00CARLTON COUNTY $911,429 $146,045 $37,233 $1,020,241 $21 $1,020,262
0022-00CARVER COUNTY $1,822,526 $291,601 $2,114,127 $471 $2,114,598
0022-09
CARVER COUNTY HISTORICAL SOCIETY $8,602 $1,376 $9,979 $0 $9,979
0024-00CASS COUNTY $732,436 $117,188 $849,624 $0 $849,624
1855-30MINNETONKA ISD-276 $1,139,847 $182,365 $42,096 $52,843 $1,332,949 $4,847 $1,337,796…… … … … … … … …
Total All Employers$329,397,17
1$52,701,183 $9,163,798 $8,522,223$381,456,77
8 $794,328$382,251,10
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Public Employees Retirement Association of Minnesota
Schedule of Pension Amounts by Employer (1 of 2)
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Public Employees Retirement Association of Minnesota
General Employees Retirement Plan
Schedule of Pension Amounts by Employer
Fiscal Year Ended June 30, 2014
Employer Unit ID
No. Employer Name
Beginning Net Pension Liability (NPL)
Ending Net Pension Liability (Single
Discount Rate Assumption
7.90%)(NPL)
Sensitivity of Ending Net
Pension Liability to 1% Decrease in Single Rate Assumption
(6.90%)
Sensitivity of Ending Net
Pension Liability to 1%
Increase in Single Rate Assumption
(8.90%)
Differences Between Expected
and Actual Economic Experience
Difference Between Projected
and Actual Investment Earnings
Changes in Actuarial
Assumptions
Changes in Proportion
and Differences Between Employer
Contributions and
Proportionate Share of
Contributions
Total Deferred
Outflows of Resources
0002-00 AITKIN COUNTY $8,563,528 $7,389,166 $11,911,634 $3,668,239 $113,401 $0 $761,527 $0 $874,9280006-00 ANOKA COUNTY $90,921,480 $78,452,931 $126,469,291 $38,946,765 $1,204,008 $0 $8,085,355 $0 $9,289,3630008-01 BECKER COUNTY $11,650,318 $10,052,648 $16,205,274 $4,990,484 $154,277 $0 $1,036,025 $0 $1,190,3020010-00 BELTRAMI COUNTY $13,332,537 $11,504,175 $18,545,195 $5,711,073 $176,553 $0 $1,185,620 $0 $1,362,1730012-00 BENTON COUNTY REVENUE $9,614,235 $8,295,783 $13,373,137 $4,118,316 $127,314 $0 $854,963 $0 $982,277
… … … … … … … … … … …1855-30 MINNETONKA ISD-276 $19,065,147 $16,450,641 $26,519,098 $8,166,671 $252,466 $0 $1,695,402 $0 $1,947,868
… … … … … … … … … … …Grand Total $5,444,074,000 $4,697,499,000 $7,572,558,000 $2,332,002,000 $72,092,000 $0 $484,124,000 $0 $556,216,000Totals from Actuarial Valuation $5,444,074,000 $4,697,499,000 $7,572,558,000 $2,332,002,000 $72,092,000 $0 $484,124,000 $0 $556,216,000
Deferred Outflow of Resources
Public Employees Retirement Association of Minnesota
Schedule of Pension Amounts by Employer (2 of 2)
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Public Employees Retirement Association of Minnesota
General Employees Retirement Plan
Schedule of Pension Amounts by Employer
Fiscal Year Ended June 30, 2014
Employer Unit ID
No. Employer Name
Differences Between Expected
and Actual Economic Experience
Difference Between
Projected and Actual
Investment Earnings
Changes in Actuarial
Assumptions
Changes in Proportion
and Differences Between Employer
Contributions and
Proportionate Share of
Contributions
Total Deferred Inflows of Resources
Proportionate Share of Plan
Pension Expense
Net Amortization of Deferred Amounts
from Changes in Proportion
and Proportionate
Share of Pension Expense
Total Pension Expense
0002-00 AITKIN COUNTY $0 $1,996,546 $0 $0 $1,996,546 $548,537 $0 $548,5370006-00 ANOKA COUNTY $0 $21,197,911 $0 $0 $21,197,911 $5,823,973 $0 $5,823,9730008-01 BECKER COUNTY $0 $2,716,216 $0 $0 $2,716,216 $746,261 $0 $746,2610010-00 BELTRAMI COUNTY $0 $3,108,418 $0 $0 $3,108,418 $854,015 $0 $854,0150012-00 BENTON COUNTY REVENUE $0 $2,241,513 $0 $0 $2,241,513 $615,840 $0 $615,840
… … … … … … … … … …1855-30 MINNETONKA ISD-276 $0 $4,444,949 $0 $0 $4,444,949 $1,221,217 $0 $1,221,217
… … … … … … … … … …Grand Total $0 $1,269,260,000 $0 $0 $1,269,260,000 $348,720,000 $0 $348,720,000Totals from Actuarial Valuation $0 $1,269,260,000 $0 $0 $1,269,260,000 $348,720,000 $0 $348,720,000
Deferred Inflows of Resources Pension Expense
Public Employees Retirement Association of Minnesota
PERA GASB 68 ReconciliationFor Fiscal Year Ended June 30, 2014
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Public Employees Retirement Association of Minnesota
Pension Expense Change in NPL during measurement period +/- deferrals
Source of Change in NPL Expense/Deferral
Service (Normal) Cost Immediate
Interest on the TPL Immediate
Projected Investment Earnings Immediate
Changes in Benefit Provisions Immediate
Actuarial Gains and Losses Expense over average remaining service lives of all active and in-active employees
Changes in Actuarial Assumptions
Changes in Proportionate Share
Differences between Projected and Actual Investment Earnings
Expense over 5-year closed period
Other Changes in the NPL Immediate
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Public Employees Retirement Association of Minnesota
Minnetonka School District GASB 68 ReconciliationFor Fiscal Year Ended June 30, 2014
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Minnetonka School DistrictGeneral Employees Retirement FundReconciliation of Beginning Net Pension Liabiliity to Ending Net Pension Liability(Dollars in Thousands)
Plan NPL
District’s Share @ 0.3502 %
Plan Deferred Outflows
Plan Deferred Inflows
District's Share of Plan
Deferred Outflows
(Amortization Period of 4
Years)
District's Share of Plan
Deferred Inflows
(Amortization Period of 5
Years)Pension Expense
0.003502 4 5Balance at the Beginning of the Year $5,444,074 $19,065Changes for the Year:
Service Cost $388,391 $1,360 $1,360Interest on Total Pension Liability $1,591,756 $5,574 $5,574Interest on Fiduciary Net Position $1,174,279 $4,112 $4,112Changes in Benefit Terms $0 $0Liability Experience Gains and Losses $96,123 $337 $72,092 $252 $84Changes in Assumptions $645,499 $2,261 $484,124 $1,695 $565Contributions - Employer $382,251 $1,339 $0Contributions - Employees $334,495 $1,171 $1,171Asset Gain (Loss) $1,586,575 $5,556 $1,269,260 $4,445 $1,111Benefit Payouts $0 $0Administrative Expenses $9,861 $35 $35Other $605 $2 $2
Net Changes $746,575 $2,615 $556,216 $1,269,260 $1,948 $4,445 $1,221Balance End of the Year $4,697,499 $16,451 $556,216 $1,269,260 $1,948 $4,445
Public Employees Retirement Association of Minnesota
Example of Deferred Inflows/Outflows Amortization Schedule
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Amortization of Deferred Inflows and Outflows of Resources Related to PensionsMinnetonka School DistrictFor the Year Ended June 30, 2015
General Employees
Retirement Fund
Amortization Year 1, 2015
ExpensedAmortization Year 2, 2016
Amortization Year 3, 2017
Amortization Year 4, 2018
Amortization Year 5, 2019
Total Amortization Years 2 through 5
2014 Remaining Deferred
Outflows/Inflows
Differences between expected and actual economic experience $252,466 $84,155 $84,155 $84,155 $252,465
Changes in actuarial assumptions $1,695,402 $565,134 $565,134 $565,134 $1,695,402
Difference between projected and actual investment earnings -$4,444,949 -$1,111,237 -$1,111,237 -$1,111,237 -$1,111,237 -$4,444,949Changes in proportion $0
Yearly impact on pension expense -$461,948 -$461,948 -$461,948 -$1,111,237
Public Employees Retirement Association of Minnesota
Example of Deferred Inflows/Outflows Investment Earnings Amortization Schedule
Minnetonka School DistrictIncrease (Decrease) in Pension Expense Arising from the Recognition of Differences
between Projected and Actual Earnings on Pension Plan Investments
Year Plan
Difference between Projected and Actual Earnings on Investments
Amort-ization Period (Years) 2015 2016 2017 2018 2019 2020 2021
2015 PERA
($5,556,186) 5
($1,111,237) ($1,111,237)
($1,111,237)
($1,111,237)
($1,111,237) - -2016 PERA $6,000,000 5 - $1,200,000 $1,200,000 $1,200,000 $1,200,000 $1,200,00020172018
Net Increase (Decrease) in Pension Expense
($1,111,237) $88,763
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Public Employees Retirement Association of Minnesota
GASB 71Amends paragraph 137 of GASB 68
Contributions after the measurement date prior to fiscal year end booked to deferred outflows rather than pension expense
At the beginning of the period in which the provisions of Statement 68 are adopted the government should recognize a beginning deferred outflow of resources only for its pension contributions
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Public Employees Retirement Association of Minnesota
Transition Year Journal Entries
Minnetonka School District example: employer contributions expensed during initial measurement period are reclassified
June 30, 2014 June 30, 2015June 30, 2013
District’s Fiscal Year End Reporting Date
(and New Measurement Date)
District’s Prior Fiscal Year End (and
Measurement Date)
Measurement Period
Measurement DateNPL PERA
$19,065,147
PERA Contributions$1.337,796
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Public Employees Retirement Association of Minnesota
Transition Year Journal Entries
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Minnetonka School District:
1) Net position $19,065,147
Net pension liability $19,065,147
Prior period adjustment to recognize beginning net pension liability as of July 1, 2014, for change in accounting principle.
2) Deferred outflows of resources $1,337,796
Net position $1,337,796
Prior period adjustment to reclassify pension contributions during the measurement period (July 1, 2013 through June 30, 2014), which had been closed to net position for the year ended June 30, 2014, as deferred outflows of resources.
Public Employees Retirement Association of Minnesota
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Year-End Journal Entries1 Net Pension Liability $1,275,864
Deferred Outflows $1,947,868
Deferred Inflows $4,444,949
Pension Expense $1,221,217
To record FY14 NPL, Deferred Outflows, Deferred Inflows and Pension Expense.
2 Deferred Outflow -
Pension Expense -
Net Pension Liability -
Deferred Inflow -
To record the change in proportionate share from prior measurement date to current measurement date. This journal entry recognizes the change in proportion between measurement periods and applies the difference to NPL.
3 Net Pension Liability $1,337,796
Deferred Outflow $1,337,796
To reclassify FY14 contributions
Public Employees Retirement Association of Minnesota
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Year-End Journal Entries
4 Pension Expense -
Deferred Outflow -
To amortize the change in proportionate share from prior valuation to current valuation.
5 Deferred Outflow of Resources $1,410,595
Cash (or Pension Expense) $1,410,595
To recognize employer contributions made during FY15.
Public Employees Retirement Association of Minnesota
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Year-End Journal Entries T-AccountsMinnetonka School District
FY 2015 Reporting Period
Net Pension Liability Deferred Outflows Deferred Inflows Fringe Benefits Expense
2) $4,444,949 $19,065,1471 T) 2 T) $1,337,796 $1,337,796 3) $4,444,949 2) 1) $1,410,595 $1,410,595 7)
3) $1,337,796 $1,947,868 2) 2) $1,947,868 $846 5)
5) $846 $1,221,217 2) 7) $1,410,595
$16,450,641 $3,357,617 $4,444,949
Pension Expense Cash (or Pension Expense) Net Position
2) $1,221,217 $1,410,595 1) 1 T) $19,065,147 $1,337,796 2 T)
$1,221,217 $1,410,595
$17,727,351
Transition year journal entries
1 T) Establish beginning NPL
2 T) Recognize deferred outflows for contributions closed to net position in the prior reporting period (FY 14)
Annual journal entries
1) Recognize contributions from the measurement date to the end of the fiscal year (June 30, 2015)
2) Recognize pension expense, deferred inflows and deferred outflows at the measurement date
3) Reclassify contributions made during the measurement period (FY 14)
4) Change in proportionate share ($0 first year)5) Difference in contributions used as the basis for the proportionate share allocation and contributions reported in the district's financial statements at the measurement date (to be determined by district)
6) Recognize pension expense for this year's amortization of prior year deferred inflows and outflows of resources (n/a for transition year)
7) Reclassify contributions after the measurement date
Public Employees Retirement Association of Minnesota
Suggested GASB 68 Footnotes
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Suggested GASB 68 Pension Footnotes for Employers Financial Statements for the Fiscal Year Ended 6/30/15 Summary of Significant Accounting Policies Pensions. For purposes of measuring the net pension liability, deferred outflows/inflows of resources, and pension expense, information about the fiduciary net position of the Public Employees Retirement Association (PERA) and additions to/deductions from PERA’s fiduciary net position have been determined on the same basis as they are reported by PERA. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Note X. Defined Benefit Pension Plans [Include information for the specific plans that apply to your entity] Plan Description The [entity] participates in the following defined benefit pension plans administered by the Public Employees Retirement Association (PERA). PERA’s defined benefit pension plans are established and administered in accordance with Minnesota Statutes, Chapters 353 and 356. PERA’s defined benefit pension plans are tax qualified plans under Section 401 (a) of the Internal Revenue Code. 1. General Employees Retirement Plan (GERF) All full-time and certain part-time employees of the [entity] [if entity is a school district add: other than teachers] are covered by the General Employees Retirement Fund (GERF). GERF members belong to either the Coordinated Plan or the Basic Plan. Coordinated Plan members are covered by Social Security and Basic Plan members are not. The Basic Plan was closed to new members in 1967. All new members must participate in the Coordinated Plan.
Public Employees Retirement Association of Minnesota
RSI Schedule of Employer’s Proportionate Share of the Net Pension Liability
Ten-year schedule presenting, by plan:Employer’s proportion, both percentage and amount,
of the collective NPL
Employer’s covered-employee payroll as of the measurement date
Employer’s amount of the collective NPL as a percentage of employee covered payroll
Plan’s fiduciary net position as a percentage of the total pension liability
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Public Employees Retirement Association of Minnesota
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Schedule of Proportionate Share of the Net Pension Liability
Minnetonka School District’s Proportionate Share of the Net Pension LiabilityPERA General Employees Retirement Fund
Required Supplementary Information (Last Ten Years*)
Fiscal Year Ending
Proportion (Percentage) of the Net Pension Liability (Asset)
Proportionate Share (Amount) of the Net
Pension Liability (Asset) (a)
Covered-Employee
Payroll (b)
Proportionate Share of the Net Pension
Liability (Asset) as a Percentage of its
Covered-Employee Payroll (a/b)
Plan Fiduciary Net Position as a
Percentage of the Total Pension
LiabilityJune 30, 2014 0.3502% $16,450,641 $18,384,703 89.48% 78.75%
* Schedule is to be provided prospectively beginning with the employer's fiscal year ended June 30, 2015, or after.
Public Employees Retirement Association of Minnesota
RSI Schedule of Employer Contributions
Ten year schedule, by plan:Statutorily required employer contributions
Actual contributions paid by employer
Difference between required and paid contributions
Amount of contributions paid in relation to required contributions as a percentage of the employer’s covered-employee payroll as of the reporting date
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Public Employees Retirement Association of Minnesota
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Schedule of Contributions
Minnetonka School District Schedule of ContributionsPERA General Employees Retirement Fund
Required Supplementary Information (Last Ten Years*)
Fiscal Year Ending
Statutorily Required
Contribution (a)
Contributions in Relation to the Statutorily
Required Contribution (b)
Contribution Deficiency
(Excess) (a-b)
Covered-Employee Payroll (d)
Contributions as a Percentage of
Covered-Employee
Payroll (b/d)
June 30, 2015 $1,410,595 $1,410,595 $0$21,653,569*
* .065%
June 30, 2014
June 30, 2013
June 30, 2012
June 30, 2011
June 30, 2010
June 30, 2009
June 30, 2008
June 30, 2007
June 30, 2006
* Option to provide RSI for ten years at transition or to provide RSI prospectively. **Estimated for purposes of illustration.
Public Employees Retirement Association of Minnesota
Annual TimelineJune 30—Fiscal year end (Measurement Date)
August—Census and asset data sent to actuary
November—Actuarial valuations finalized
December 1—PERA prepares GASB schedules
December—Plan auditor finalizes GASB 68 audit
January 10—PERA publishes GASB schedules and audit report
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Public Employees Retirement Association of Minnesota
SummaryEvery year PERA will provide audited GASB 68
information on its website (Financial Reporting Toolkit)Independent Auditor’s Report and Management LetterSchedule of Employer AllocationsSchedule of Pension Amounts by EmployerNotes to the pension allocation schedules
The information should be available by late July/August in 2015 for employers with a June 30 fiscal year, and in January in future years
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Public Employees Retirement Association of Minnesota
American Institute of CPAs®
30Governmental Audit Quality Center
Cost-Sharing Plans: Employer Responsibilities
• Complete and accurate census data to plan
• Appropriateness of information used to record financial statement amounts
• Whether plan auditor’s report on schedules are adequate and appropriate for employer purposes
• Amounts in schedules specific to employer
• employer amount used in allocation percentage (numerator)
• recalculate allocation percentage of employer• recalculate allocation of pension amounts
based on allocation percentage of employer
Report
Evaluate
Verify & Recalculate
Public Employees Retirement Association of Minnesota
American Institute of CPAs®
31Governmental Audit Quality Center
Cost-Sharing Plans: Employer Auditor Responsibilities
• Sufficiency and appropriateness of audit evidence
• Whether plan auditor’s report on schedules are adequate and appropriate for auditor purposes (e.g., evidence)
• Review plan auditor’s report and any related modifications
• Evaluate whether plan auditor has necessary competence and independence
• Determine whether named as specified user
• Amounts in schedules specific to employer• Employer amount used in allocation percentage
(numerator)• Recalculate allocation percentage of employer• Recalculate allocation of pension amounts based on
allocation percentage of employer
• Census data submitted to plan
Determine
Evaluate
Verify & Recalculate
Test
Public Employees Retirement Association of Minnesota
More Information
PERA’s website• www.mnpera.org• Employers tab• GASB 68 Public Pension Accounting Standards
Contact Jim Riebe at GASB@mnpera.org
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