CSHB 2365 would create Chapter 2264 of Subtitle F, Title 10, Government Code to provide guidelines for financial accounting and reporting standards. The bill sets requirements under the chapter regarding the accounting and reporting of financial activities for the state and its political subdivisions. The language permits the state and its political subdivisions to account for other postemployment benefits (OPEBs) on a pay-as-you-go basis. The Governmental Accounting Standards Board has issued Statements 43 and 45 creating accounting standards for OPEBs, including retiree health. It would require pension systems and their governmental sponsors to disclose both prior service liabilities, and an ongoing net OPEB obligation reflecting liability for any funding shortfalls. The reporting of OPEBs for local entities under the provisions of the bill is permitted to follow either a pay-as-you go basis or the GASB reporting standards.

The bill would require the Employees Retirement System (ERS), the Teacher Retirement System (TRS), the Texas A&M University System and the University of Texas System to communicate to its members the extent of the system’s commitments regarding OPEBs. Also, the disclosure of OPEBs in financial reports of the state and its political subdivisions would be required and the governmental entity would disclose the accounting, financing and funding policy used to report OPEBs. The state would be further required to disclose, in its financial statements, whether it intends to provide guaranteed OPEBs in future years or not.

The proposed legislation could affect the statement of liabilities for every public retirement system which has a government sponsor that also provides retiree health benefits.