SB 1575, committee report 2nd house substituted, would authorize a political subdivision to issue obligations to fund any or all of an unfunded actuarial accrued liability for a non-pension retirement benefit. The Governmental Accounting Standards Board (GASB) has issued Statements 43 and 45 creating accounting standards for Other Post-Retirement Benefits (OPEBs), including retiree health. These statements generally 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 provisions of the bill state that obligations may not be issued after December 31, 2011. The proposed legislation could affect the funding of liabilities for every public retirement system which has a government sponsor that also provides retiree health benefits. If obligations were issued and returns were better than than the interest rate the obligations were issued at, the political subdivision would have improved funding; otherwise the subdivision would have additional liabilities.