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Summary of Statement No. 45 <br />parameters require that the selection of actuarial assumptions, <br />including the healthcare cost trend rate for postemployment <br />healthcare plans, be guided by applicable actuarial standards. <br />Alternative Measurement Method <br />A sole employer in a plan with fewer than one hundred total plan <br />mem ers (including employees in active service, termina e <br />employees who have accumulated benefits but are not yet receiving <br />them, and retirees and beneficiaries currently receiving benefits) <br />has the option to apply a simplified alternative measurement method <br />instead of obtaining actuarial valuations. The option also is available <br />to an agent employer with fewer than one hundred plan members, in <br />circumstances in which the employer's use of the alternative <br />measurement method would not conflict with a requirement that the <br />agent multiple-employer plan obtain an actuarial valuation for plan <br />reporting purposes. Those circumstances are: <br />The plan issues a financial report prepared in conformity with <br />the requirements of Statement 43 but is not required to obtain <br />an actuarial valuation because (a) the plan has fewer than <br />one hundred total plan members (all employers) and is <br />eligible to use the alternative measurement method, or (b) the <br />plan is not administered as a qualifying trust, or equivalent <br />arrangement, for which Statement 43 requires the <br />presentation of actuarial information. <br />. The plan does not issue a financial report prepared in <br />conformity with the requirements of Statement 43. <br />This alternative method includes the same broad measurement <br />steps as an actuarial valuation (projecting future cash outlays for <br />benefits, discounting projected benefits to present value, and <br />allocating the present value of benefits to periods using an actuarial <br />cost method). However, it permits simplification of certain <br />assumptions to make the method potentially usable by <br />nonspecialists. <br />Net OPEB Obligation-Measurement <br />An employer's net OPEB obligation is defined as the cumulative <br />difference between annual OPEB cost and the employer's <br />contributions to a plan, including the OPEB liability or asset at <br />transition, if any. (Because retroactive application of the <br />measurement requirements of this Statement is not required, for <br />most employers the OPEB liability at the beginning of the transition <br />year will be zero.) An employer with a net OPEB obligation is <br />required to measure annual OPEB cost equal to (a) the ARC, <br />(b) one year's interest on the net OPEB obligation, and (c) an <br />adjustment to the ARC to offset the effect of actuarial amortization of <br />past under- or overcontributions. <br />Financial Statement Recognition and Disclosure <br />Sole and agent employers should recognize OPEB expense in an <br />amount equal to annual OPEB cost in government-wide financial <br />statements and in the financial statements of proprietary funds and <br />http://www. gasb.org/st/summary/gstsm45.html <br />Page 3 of 5 <br />2/12/2008 <br />