Accounting For OPEBs: Does Better Accounting Serve The Public Interest?

Pearson, Timothy; Jerris, Scott I.; Brooks, Richard C.

doi:10.19030/jabr.v11i3.5854

Cited by 4 publications

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“…This concern is well established in studies of OPEB reporting in the private sector (e.g., Chung, Jacob, & Neuwirth, 1993;Hann, Lu & Subramanyan, 2007;Pearson, Jerris, & Brooks, 1995;Rizzo, 2009). Fogarty and Grant (1995), for example, demonstrate that the relationship between actuaries and accountants creates an opportunity for collusion between actuaries and their clients to generate favorable financial statements.…”

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confidence: 88%

Recognizing and Responding to Retirement Obligations

Matkin

Krivosheyev

2012

The American Review of Public Administration

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With the implementation of recent accounting standards (GASB 43 and 45), local governments began reporting their liabilities and funding levels for postemployment benefits other than pensions-so-called OPEBs. In this article we pose three questions: (a) What factors affect the size of a government's OPEB liability? (b) How did the OPEB standards affect the way governments manage their OPEB plans? and (c) What factors explain government responds to the OPEB standards? We draw data directly from audited financial reports in Florida counties and cities to examine those questions. Our results suggest that benefit policies, personnel characteristics, and actuarial cost methods are the most influential factors in determining a size of a government's OPEB liability. Our results also provide evidence that many governments responded to the OPEB standards by reducing their benefits and changing their funding approaches. We show preliminary evidence of differences in governments that changed their policies or funding approaches with those that continued the status quo.Keywords administrative reform, financial transparency, retirement benefits, accounting standards, financial management Given the aging American workforce and widespread concern about the financial health of many public-employee pension funds, the management and sustainability of public retirement systems has become one of the most prominent and controversial policy issues in state and local government. A recent national poll (CNN, 2011) illustrates that Americans are widely divided over whether pensions and other retirement benefits for government workers should be increased (15%), kept the same (33%), decreased a little (26%), decreased a lot (21%), or eliminated (5%). 1 There is also evidence that opposition to public retirement benefits is on the rise. RecentThe American Review of Public Administration 43 (5) This article proceeds as follows. The next section briefly overviews the development and implementation of the OPEB standards. That is followed by a discussion of our research questions, variable selection, and hypotheses. Then, the data and analysis are described. The article closes with a review of our findings and conclusions.

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Recognizing and Responding to Retirement Obligations

Matkin

Krivosheyev

2012

The American Review of Public Administration

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“…Learning from the FAS 106 Experience Pearson and Jerris (1995) argued that including liability reporting for OPEB reduced healthcare and other benefits received by private sector employees and retirees. FAS 106 became effective December 15, 1992, and statistics show that the private sector has since seen decreasing retiree health benefits.…”

Section: Possible Responses To Gasb 45 and The Subsequenst Realizationmentioning

confidence: 99%

Changing and/or funding opeb promises: A typology of local government responses to gasb 45 and the realization of opeb liabilities

Yusuf

Musumeci²

2012

Journal of Public Budgeting, Accounting &Amp; Financial Management

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GASB Statement No. 45 addresses how governmental units account for employees' other post-employment benefits (OPEB), requiring government employers to replace OPEB reporting on a pay-as-you-go basis with an accounting of the cost of current and future benefits. This requirement and the resulting OPEB liability may prompt government employers to reconsider key questions regarding their OPEB provision. The size of the OPEB liability depends on both the benefit promises made to employees and the assets to fund these promises. We propose a typology that defines four approaches for governments to respond to GASB 45 and their OPEB liabilities. These approaches represent different combinations of strategies involving OPEB promises and assets. We illustrate these strategies and responses using selected counties and nine mid-Atlantic cities.

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A theory of the corporate decision to resist FASB standards: An organization theory perspective

Elbannan

McKinley

2006

Accounting, Organizations and Society

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Accounting For OPEBs: Does Better Accounting Serve The Public Interest?

Cited by 4 publications

References 0 publications

Recognizing and Responding to Retirement Obligations

Recognizing and Responding to Retirement Obligations

Changing and/or funding opeb promises: A typology of local government responses to gasb 45 and the realization of opeb liabilities

A theory of the corporate decision to resist FASB standards: An organization theory perspective

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