OPEB= Other post-employment benefits
GASB= Government Accounting Standards Board
Over the past month we have discussed how the City of Worcester has not place enough money aside to fully fund the pension and OPEB obligations that are due employees of the City of Worcester. According to last year’s Auditor’s Report, the deficit in funded for the pension was $410,000,000 while the OPEB came in at $636,000,000, Between the two we under-funded by more then one billion dollars. Recently the GASB has approved two draft that would significantly make state and local governments to improve the financial reporting of other post-employment benefits (OPEB).
Here is a link to the GASB fact sheet on these two drafts. The long and the short of it is that the drafts would require state and local governments to recognize their net OPEB liabilities on the the face of their financial statements. In other words anyone, especially bond rating companies, would have a clearer better understanding of these OPEB costs and whether or not these are being funded adequately or not. These accounting changes would stop hiding these OPEB liabilities are being hidden, which are estimated to be over $4 Trillion dollars by SEC Commissioner Dan Gallagher.