The Governmental Accounting Standards Board (GASB) is a
nonprofit entity that sets accounting standards for state and
local governments in the United States. The GASB is similar to
the professional boards that set accounting standards for
private sector entities and the federal government.
Beginning in 2007, the provisions of GASB Statement 45 (GASB 45) began to
take effect for state and local governments. Under GASB 45, over the next
several years, state and local governments will—for the first time—compile data
about their retiree health and similar benefits and have an actuary calculate
the unfunded liabilities that have been accrued to provide those benefits to
retirees in future years. Governments already collect such information for
their pension systems.
The GASB 45 is an accounting standard—not a legal requirement for governments
to change anything about current public retiree health benefits or their
funding. Nevertheless, under state and local laws, as well as bond agreements,
most governments must release financial statements that comply with GASB rules,
such as GASB 45, each year. Therefore, most governmental entities will release
financial statements that include a valuation of unfunded retiree health
liabilities at some point during the next few years.