Governmental: What We Have Seen – Elizabeth Thyer, Partner, CPA

+ Governmental entities are implementing Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, (GASB 75) for the fiscal year ended June 30, 2018. This statement supersedes GASB 45 and portions of others. The revised requirements provided in GASB 75 establish new financial reporting requirements for local governments that provide their employees with other postemployment benefits (OPEB), for most this consists of the option to continue participating in the governmental entity’s health insurance plan until the retiree reaches age 65.

+ With the implementation of GASB 75, local governments are adding additional footnote disclosures to their financial statements, and there is additional required supplementary information provided. The liability that has been titled “Net OPEB Liability” in prior years will now be titled “Total OPEB Liability.” GASB 75 also requires the local government to use the entry age normal actuarial cost method and requires deferred outflows of resources and deferred inflows of resources, which arise from other types of events related to other postemployment benefits, to be recognized in the financial statements. During the year of implementation, beginning net position for the governmental activities is being restated to retroactively report the change in valuation of the beginning total other postemployment benefit liability. Beginning deferred outflows of resources and beginning deferred inflows of resources are not reported in the year of transition.

+ The governmental entities are in the fourth year of reporting a Net Pension Liability for their proportionate share of the IPERS net pension liability. The liability to be reported on the government-wide statement of net position has grown for most governmental entities for the fiscal year ended June 30, 2018.

+ Due to the low interest rates available for investments, many governmental entities have decided to cash out their investments in certificates of deposit. More and more entities are looking to money market accounts, stamped drainage warrants and investments in government securities for a higher rate of return.

+ Local governments are continuing their usage of tax increment financing. While this has become a common way to finance economic development and other projects, it is important to understand that tax increment financing is a reimbursement process and only tax increment financing obligations are to be paid from tax increment financing collections. There must be an urban renewal project within the limits of an urban renewal plan. Disbursements must be made for this urban renewal project and subsequently certified to the county auditor in order to be eligible to be reimbursed by tax increment financing collections. As the process continues, communication between the governmental entity with the tax increment financing and the county auditor is essential to make sure all obligations are certified and all collections have been properly apportioned and reconciled.