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County Home => Finance/Comptroller => OPEB => What is OPEB

WASHOE COUNTY, NEVADA OPEB TRUST FUND  

WHAT IS "OPEB?"

OPEB (Other Postemployment Benefits) is a government's non-pension benefits commitment to its employees, promised as future compensation for services rendered.

WHY CREATE AN OTHER POSTEMPLOYMENT BENEFITS TRUST FUND?

In the past, governments typically did not report the cost of benefits until after employees retired.  This approach is not comprehensive—only revealing a limited amount of data, and does not account for costs and obligations incurred as governments receive employee services each year for which they have promised future benefit payments in exchange.

Governmental Accounting Standards Board (GASB) Statement No. 45 was issued to provide more complete, reliable, and decision-useful reporting of costs and financial obligations that governments incur when they provide non-pension postemployment benefits as part of the compensation to their employees. Postemployment healthcare benefits, the most common form of OPEB, are a very significant financial commitment for many governments.

  • When GASB No. 45 is implemented, governments will report annual OPEB cost and their unfunded actuarial accrued liabilities for past service costs. This will foster improved accountability and a better foundation for informed policy decisions about, for example, the level and types of benefits provided and potential methods of financing those benefits.
  • The Standard will also result in reporting the estimated cost of the benefits as expensed each year during the years that employees are providing services to the government and its constituents in exchange for those benefits.
  • Diverse users of a government’s financial reports can expect more accurate information about the total cost of the services that a government provides to its constituents.
  • Whether the amount a government has contributed for OPEB during the report-year has covered its annual OPEB cost will be clarified. Generally, the more of its annual OPEB cost that a government chooses to defer, the higher will be (a) its unfunded actuarial accrued liability and (b) the cash flow demands on the government and its tax or rate payers in future years.
  • Report users can expect better information about a government’s unfunded actuarial accrued liabilities (the difference between a government’s total obligation for OPEB and any assets it has set aside for financing the benefits) and changes in the funded status of the benefits over time.

INCEPTION OF THE WASHOE COUNTY, NEVADA OTHER POSTEMPLOYMENT TRUST FUND

Washoe County had been utilizing a special revenue fund, the Pre-Funded Retiree Health Benefits Fund, to accumulate resources to pay for the retiree health insurance liability.  From June 1997 through June 2010, funds were transferred annually from the General Fund to begin pre-funding the County's liability.  In order to apply those assets against this liability, however, GASB 45 requires that the assets be in an irrevocable trust fund.  Pursuant to NRS 287.017, the creation of such trust funds are now allowed with appropriate investment mechanisms for the purpose of meeting those requirements, and implementation of GASB's established, structured process for the prefunding of future costs.

GASB Statement No. 45 on Other Postemployment Benefits accounting became effective for Washoe County in fiscal year ending June 30, 2008.  On May 11, 2010, the Board of County Commissioners approved a resolution authorizing creation of the Washoe County, Nevada OPEB Trust Fund, and appointed a three-member Board of Trustees to govern the Trust's financial activities.