Governments are being urged to conduct an actuarial study to determine the actual long-term liability of these post-employment benefits and then devise a plan to reduce or systematically fund these future expenditures.
PONTE VEDRA BEACH, FL (PRWEB) December 6, 2006
One of the nation's leading pension administration services companies is reaching out to state and municipal governments as they prepare to meet compliance deadlines for a government accounting standard change.
Dorsa Consulting (http://ww.dorsaconsulting.com) has assembled a highly qualified team that will lead efforts in this new service offering. All non-federal government entities providing post-employment benefits are effected by the new rules. Those whose budgets are larger than $100 Million must begin complying with the Governmental Accounting Standards Board's Statement 45 ruling by December 15, 2006. Governments with budgets less than $100 Million to $10 Million must comply with the ruling by December 15, 2007, while entities with less than $10 million budgets must comply by December 15, 2008.
An estimated 84,000 state and municipal governments and governmental entities, such as school districts must comply with the ruling known as GASB-45 or other post-employment benefits, OPEB. The ruling requires these government entities to compute the value of any non-pension retirement benefits they provide employees, such as medical insurance, bus passes or other perks. Under the new standards, the value of such perks, which are financial obligations of these government entities, must be recognized and disclosed in their current budget processes.
"The impact of this ruling is very far-reaching and we're excited to have assembled a uniquely-qualified team to help governments comply," said John McCrary, CRA, CRC, principal and managing partner of Dorsa Consulting. "Governments are being urged to conduct an actuarial study to determine the actual long-term liability of these post-employment benefits and then devise a plan to reduce or systematically fund these future expenditures."
Some states have already conducted studies to determine the costs of their future retirement benefits and the results are daunting. A study showed the State of Maryland's future OPEB obligations to be more than $20 Billion. State officials in Alabama estimated the state's unfunded liability for state employees and teachers to be as high as $20 Billion over the next 30 years. Some economists have estimated the total obligation owed nationwide by these affected government entities is more than $2 Trillion.
"The irony of GASB-45 is that there is no mandate for compliance," McCrary said. "However, GASB-45 will impact government entities' ability to issue bonds and obtain financing. The Government Finance Officers Association and other bond rating companies, such as Standard & Poor's, have stated lenders will consider GASB-45 when determining future credit and performance ratings."
Dorsa Consulting's actuaries help governments gather GASB-45 compliance data, make recommendations on how these governments can minimize their obligations, plan lender-oriented funding strategies and work with investment managers to properly fund these retirement benefits.
With revenues in excess of $1.5 million, Dorsa Consulting currently provides pension plan administration support to more than 75 professional firms that represent more than 500 plans, as well as to more than 250 individual plan sponsors.
About Dorsa Consulting:
Dorsa Consulting, founded in 1994 as Lorraine Dorsa and Associates, provides pension administration and actuarial services. Its services range from plan design, consulting, actuarial, non-discrimination testing and administration services for all types of plans. Reach them at (800) 361-4635 or on the Web at http://www.dorsaconsulting.com.