Accounting
Financial Management
GASB 75: Accounting for Retiree Health (OPEB) Liabilities in Governments and Schools
Last updated: October 12, 2026 · Independent guide · We do not sell rankings or coverage.
GASB 75 requires a state or local government that provides retiree health or other non-pension postemployment benefits (OPEB) to report the liability in its government-wide statements as employees earn it, not when benefits are paid. If the benefits run through a trust that meets GASB’s criteria, you report a net OPEB liability (total liability minus plan assets); if they do not, you report the full total OPEB liability. In practice, you send census and premium data to an actuary, book the actuary’s figures in your fund accounting system, and build ten-year required supplementary information (RSI).
The rule in brief
- Official source: GASB Statement No. 75 (June 2015) and Implementation Guide No. 2017-3 (December 19, 2017).
- Who it applies to: state and local governments, including school districts, that report under GAAP and provide OPEB.
- Requirement: report the total or net OPEB liability, OPEB expense and deferred outflows and inflows, plus notes and 10-year RSI.
- Threshold: plans with fewer than 100 members may use the alternative measurement method.
- Key dates: effective for fiscal years beginning after June 15, 2017; actuarial valuation at least every two years; measurement date no earlier than the end of the prior fiscal year.
- Checked: October 12, 2026.
What GASB 75 requires in detail
Total OPEB liability vs net OPEB liability
The total OPEB liability is the present value of projected benefit payments attributed to past service. GASB 75 requires the entry age actuarial cost method, with service cost set “level as a percentage of that employee’s projected pay” (GASB Statement No. 75, paragraph 42, June 2015). The net OPEB liability is that total minus the plan’s fiduciary net position, which only exists when assets sit in a qualifying trust.
Plans with and without a qualifying trust
Paragraph 4 sets three trust tests: contributions are irrevocable, assets are dedicated to OPEB under the benefit terms, and assets are legally protected from creditors of the employer, nonemployer contributors and plan administrator (GASB 75, paragraph 4). A reserve inside your general fund does not pass these tests.
Without a qualifying trust, you report the total OPEB liability, and the discount rate is the yield or index rate for 20-year, tax-exempt general obligation municipal bonds rated AA/Aa or higher (the rate defined in GASB 75, paragraph 36; TMRS, July 2024). The Texas Municipal Retirement System tells cities its Supplemental Death Benefits Fund fails the test because active and retiree assets are commingled (TMRS GASB 75 Employer Reporting Guide, July 2024).
In a cost-sharing multiple-employer plan, such as a statewide teacher retiree health plan, you report your proportionate share using figures the plan provides.
The implicit rate subsidy
When retirees under 65 stay on the active plan at the same blended premium, the employer subsidizes them even if they pay 100% of it, because older members cost more than the blend. GASB 75 requires projected benefit payments to be based on “claims costs, or age-adjusted premiums approximating claims costs” (GASB 75, paragraph 33). Unlike GASB 45, this applies to community-rated plans too (Milliman, May 2018; Milliman sells actuarial services).
Lewis & Ellis illustrated an age-adjusted retiree cost of about $10,196 per retiree per year against a $6,000 premium, leaving $4,196 per retiree as the employer’s indirect cost (Lewis & Ellis, April 2024; an actuarial firm). Minnesota’s State Auditor says this subsidy is often the only OPEB liability its public entities have (Minnesota Office of the State Auditor, Statement of Position, reviewed January 2019).
Deferred outflows and deferred inflows of resources
Experience differences and assumption changes are recognized over a closed period equal to the average expected remaining service lives of all covered employees. Differences between projected and actual investment earnings on trust assets are recognized over a closed five-year period. Unrecognized amounts are deferred outflows or inflows (GASB 75, paragraph 43).
Employer contributions made after the measurement date but before fiscal year-end are reported as a deferred outflow (paragraph 44). It is not amortized; each year you reverse the prior amount and record the new one (TMRS, July 2024).
Required supplementary information
RSI covers the 10 most recent fiscal years and includes a schedule of changes in the net (or total) OPEB liability and related ratios, plus a schedule of contributions where applicable (GASB 75, Summary and paragraph 57). Without a trust, TMRS notes, the schedule shows the total OPEB liability against covered payroll and states that no assets are accumulated in a qualifying trust. Notes must also show the liability at a discount rate and a healthcare cost trend rate one percentage point higher and lower than assumed (GASB 75, paragraphs 52 and 53, for single and agent employers with a qualifying trust). TMRS reports the same discount rate sensitivity for its plan without a trust.
Who is exempt and who gets relief
GASB 75 binds governments that issue GAAP statements; one reporting on a cash or regulatory basis follows that basis. Minnesota’s State Auditor notes that contributions employees use to buy insurance outside the entity create no OPEB liability when the entity offers no contributions or other benefits to retirees.
The main relief is the alternative measurement method (AMM). An employer may use it when fewer than 100 employees, active and inactive, are provided with OPEB through the plan (GASB 75 Summary; paragraphs 225 and 226, as amended by GASB Statement No. 85, per the Minnesota State Auditor). It allows simplified assumptions, such as a single retirement age, outside turnover tables and premiums as the starting cost (Milliman, May 2018). Minnesota’s State Auditor says your external auditor should not prepare it because of auditor independence. Because paragraph 43 defers experience and assumption changes only when the AMM is not used, those changes go straight to OPEB expense.
Deadlines and consequences
| Requirement | Rule | Source |
|---|---|---|
| Effective date | Fiscal years beginning after June 15, 2017 | GASB 75 Summary |
| Valuation frequency | Full actuarial valuation at least biennially; off-years use a roll-forward | GASB 75, para. 28 |
| Valuation date limit | No more than 30 months and 1 day before your most recent fiscal year-end | GASB 75, para. 28 |
| Measurement date | No earlier than the end of the prior fiscal year, applied consistently | GASB 75, para. 27 |
| RSI | 10 most recent fiscal years | GASB 75 Summary; para. 57 |
GASB does not levy fines. Errors lead to audit findings, restatements or a modified opinion.
Records you must keep
Keep each actuarial report with the census file behind it, plan documents and bargaining provisions on retiree eligibility, premium rates by tier, trust documents, and a dated log of employer contributions. Lewis & Ellis stresses that each deferred amortization base must be tracked until fully amortized.
Census and claims data your actuary needs
This table is based on the data list from Lewis & Ellis, with a note from Iowa School Finance Information Services (ISFIS), which sells valuations with VIA Actuarial Solutions (ISFIS, no date shown).
| Data | Typical source system | Why it matters |
|---|---|---|
| Census data for active employees as of the valuation date, plus projected salary growth | Payroll/HR module | Cost is spread as a level percentage of pay |
| Retiree eligibility and spouse coverage provisions; how many retirees elected coverage | Plan documents, bargaining agreements, benefits administration | Drives projected cost |
| Census data for covered retirees; retiree premium rates | Benefits billing, AP or retiree billing records | Early and Medicare retirees must be included (ISFIS) |
| Plan premium rates, schedule of benefits for each plan option, renewal detail (fully insured plans) | Carrier or consortium renewal | Starting point for age-adjusted costs and the implicit subsidy |
| Monthly paid claims and enrollment; admin fees; stop-loss premiums | Third-party administrator reports (self-funded plans) | Claims experience sets per-capita cost |
| Employer benefit payments during the year and trust assets | General ledger, trust statements | Payments reduce the liability; only trust assets offset it |
What to set up in your systems to comply
Governmental funds stay on modified accrual. Paragraph 46 limits the fund liability to amounts normally liquidated with expendable available resources, so funds record expenditures for benefits paid. The full liability, expense and deferrals go in the government-wide statements through year-end conversion entries, with a share on any enterprise fund.
Illustration (constructed numbers, measurement date equal to fiscal year-end): beginning total OPEB liability is $4,200,000. The actuary reports service cost of $180,000, interest of $150,000, a $320,000 increase from a lower discount rate, and benefit payments of $200,000 ($120,000 of explicit retiree premiums plus an $80,000 implicit subsidy). The ending liability is $4,650,000. With an eight-year average remaining service life, $40,000 of the assumption change is recognized this year and $280,000 is deferred, so OPEB expense is $370,000. The $120,000 already sits in an account mapped to OPEB expense.
| Account | Debit | Credit | Note |
|---|---|---|---|
| Deferred outflows of resources, OPEB | $280,000 | Unamortized assumption change | |
| OPEB expense | $170,000 | $370,000 less $200,000 of payments already expensed | |
| Total OPEB liability | $450,000 | $4,200,000 to $4,650,000 | |
| OPEB expense | $80,000 | Implicit subsidy treated as a benefit payment | |
| Health insurance expense, active employees | $80,000 | Reclassify out of active benefits |
This mirrors the Lewis & Ellis pattern of debiting employer contributions to the OPEB liability with the credit to cash or group health expense. If your measurement date precedes year-end, add a deferred outflow for contributions between the two dates. For a broader view of year-end entries, see our guide to accounting close automation.
Tyler Enterprise ERP (Munis)
Enterprise ERP, formerly Munis, covers financials, procurement, HR, payroll and revenue (Software Connect, no date shown). Tyler’s product page (no date shown) does not describe a GASB 75 feature, so plan to post the actuary’s entries yourself in a conversion fund or year-end journal. Pricing is not published.
Caselle
Caselle’s general ledger offers a journal entry workflow for consistent, documented entries and customizable financial statements and standard reports (Caselle, no date shown). The page does not mention GASB 34 conversion or OPEB, so confirm how government-wide statements are produced. Pricing is not published.
Sage Intacct
Sage Intacct markets GASB-compliant fund accounting with a dimensional chart of accounts (Sage, no date shown). Its GAAP adjustment books let you post year-end adjustments without changing monthly history and report them alone or combined with other books; you enable them under General Ledger > Setup > Configuration (Sage Intacct Help, last modified October 8, 2026). Sage does not publish pricing; see our Sage Intacct profile for more, or compare options in our fund accounting software guide.
How we researched this
We read GASB Statement No. 75 and coverage of Implementation Guide No. 2017-3, then compared guidance from New York and Minnesota oversight bodies, TMRS and three actuarial providers. We focused on what ranking pages omit: the data extract, the implicit subsidy entry and fund accounting mechanics. Sources were checked October 12, 2026.
Related guides
- GASB 68 Pension Reporting for Governments and Schools
- GASB 34 Reporting: Requirements and 2026 Changes
- ACFR: Sections, Timeline and How to Produce It
Frequently asked questions
What is the difference between GASB 45 and GASB 75?
Under GASB 45, the unfunded actuarial accrued liability was reported in the footnotes (NY Comptroller, no date shown). GASB 75 replaced it for fiscal years beginning after June 15, 2017 and requires the full total or net OPEB liability on the face of the government-wide statements.
Do we have an OPEB liability if retirees pay the full premium?
Usually yes, if retirees stay on your active employee plan at a blended rate. GASB 75 requires age-adjusted costs, so the gap between a retiree’s expected claims and the blended premium is an implicit subsidy that counts as OPEB.
How often do we need a GASB 75 actuarial valuation?
A full valuation is required at least every two years. In the off year, the actuary rolls the prior valuation forward to the new measurement date, and the valuation date can be no more than 30 months and 1 day before fiscal year-end.
Does the OPEB liability go in the general fund?
Generally no. Governmental funds record expenditures for benefits paid and matured amounts due. The long-term liability and deferrals appear only in the government-wide statements.
Can we reduce the liability by setting money aside?
Only if the money goes into a trust where contributions are irrevocable, assets are dedicated to OPEB and assets are protected from creditors. A reserve or designated fund balance does not reduce the liability. New York, for example, has no statute expressly authorizing local OPEB trusts (NY Comptroller, no date shown).
Sources
- Governmental Accounting Standards Board, Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, June 2015 (copy hosted by Teachers’ Retirement System of Kentucky). trs.ky.gov
- Deloitte DART, GASB Issues Implementation Guide on Other Postemployment Benefits (Implementation Guide No. 2017-3), December 19, 2017. dart.deloitte.com
- Journal of Accountancy, GASB issues OPEB implementation guide, December 19, 2017. journalofaccountancy.com
- Minnesota Office of the State Auditor, Statement of Position: OPEB for Local Governments Based on GASB Statement No. 75, reviewed January 2019. osa.state.mn.us
- New York Office of the State Comptroller, GASB 75 FAQ, no date shown. osc.ny.gov
- Texas Municipal Retirement System, GASB 75 Employer Reporting Guide, July 2024. tmrs.com
- Lewis & Ellis (actuarial firm), GASB 74/75, Illinois Community College CFO Spring Conference, April 2024. ivcc.edu
- Milliman (sells actuarial services), GASB 74/75: Impact on small government employers, May 2018. milliman.com
- Iowa School Finance Information Services (sells valuation services), GASB 75, no date shown. iowaschoolfinance.com
- Sage Intacct Help, Set up for GAAP or tax adjustments, last modified October 8, 2026. intacct.com
- Sage, Sage Intacct for government and public benefit organizations, no date shown. sage.com
- Caselle, General Ledger, no date shown. caselle.com
- Tyler Technologies, Enterprise ERP, no date shown. tylertech.com
- Software Connect, Tyler Technologies Enterprise ERP profile, no date shown. softwareconnect.com
Sherman Hsieh
Independent analysis of enterprise software — ERP, CRM and more
