LEGISLATIVE BUDGET BOARD
Austin, Texas
 
ACTUARIAL IMPACT STATEMENT
 
80TH LEGISLATIVE REGULAR SESSION
 
April 16, 2007

TO:
Honorable Vicki Truitt, Chair, House Committee on Pensions & Investments
 
FROM:
John S. O'Brien, Director, Legislative Budget Board
 
IN RE:
HB2365 by Truitt (Relating to financial accounting and reporting for this state and political subdivisions of this state.), Committee Report 1st House, Substituted

 

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 systemís 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.



Source Agencies:
338 Pension Review Board
LBB Staff:
JOB, WM