The Elephant in the Room: Unfunded Public Employee Health Care Benefits & GASB 45

Authors: Eric S. Berman, CPA, Deputy Comptroller, Commonwealth of Massachusetts and Elizabeth K. Keating, CPA, Ph.D, Lecturer on Law, Harvard Law School, Harvard University

This paper will review Statement 45’s potential impact on governments and review existing disclosures in financial reports as well as bond offering statements. The paper will discuss the Statement’s impact on budgets and governmental operations, including collective bargaining. Funding options under Statement 45 will be detailed, including the advantages and disadvan- tages of irrevocable trusts and OPEB bonds. The paper will also discuss the impact of Medicare Part D subsidies received by governments, as well as the bond rating implications of policy decisions surrounding OPEB. Finally, the paper will discuss case law that has already come before state courts related to restructuring of benefits.

The Elephant in the Room: Unfunded Public Employee Health Care Benefits & GASB 45