« Ind. Decisions - More on yesterday's CAFO opinion | Main | Ind. Courts - Still more on: Carmel annexations before both Court of Appeals and Supreme Court »

Friday, December 08, 2006

Ind. Gov't. - "Lawyers to Catch More Work with New Benefit Disclosure Rules"

This story from the National Law Journal, headed "Lawyers to Catch More Work with New Benefit Disclosure Rules: Public entities must detail what is owed and how they will pay for benefits." Some quotes:

A far-reaching change to accounting rules for public employers has attorneys across the country braced for a surge of legal work.

The new rules, which will be phased in starting this month, require government entities -- from cities to universities to school districts -- to calculate and report how much they owe for health care costs and other post-employment benefits for their present and future retirees.

Prompted in part by the recent demise of employee pensions among several companies in the private sector, the new rules call for public employers to disclose the amount they have promised to retirees for health care coverage, life insurance, dental coverage and more. Importantly, public employers also will need to show how they will pay for those benefits.

The upshot for attorneys, particularly those in the public-finance area, is an expected avalanche of work from municipal governments, hospitals and any other public employers scrambling to comply.

"I've been in municipal finance for 31 years, and I've never seen anything like this," said Edsell "Chip" Eady, a partner in the San Francisco office of Nixon Peabody. * * *

The reporting changes stem from new requirements under the Government Accounting Standards Board (GASB), which now call for government entities to report two types of information. First, they must identify the annual cost of their OPEB obligations. Second, they must report the net OPEB obligations, meaning the difference between what they owe and what they have contributed to cover those costs.

Riding on the reported figures will be the entities' credit rating and, ultimately, their ability to borrow money.

The rules, which will affect thousands of municipalities and other public employers, will be phased in based on the size of the entity. Larger governments with annual revenue that exceeds $100 million must start disclosing their unfunded liabilities on all financial reports starting on Dec. 15. The new rules apply to governments with revenue between $10 million and $100 million starting on Dec. 15, 2007, with the smallest government entities reporting one year later.

This is interesting when read this in conjunction with this ILB entry from Jan. 11, 2006, quoting from a story by Jennifer Whitson, then at the Evansville Courier & Press (note especially the last two paragraphs):
Legislative leaders are considering changes to a lifetime subsidized health insurance perk for lawmakers, but a bill that would end the program appears doomed.

In 2001, then-Speaker John Gregg and President Pro Tem Robert Garton, R-Columbus, added a benefit for lawmakers, spouses and some staff who have served at least six years and one day on the job to be able to lock in their state-funded health insurance plan for life. * * *

In 2004, a handful of Republicans, including Troy Woodruff of Vincennes, ran against Democrat incumbents decrying the benefit as a luxurious perk. In 2005, Woodruff filed a bill to eliminate the perk. The bill never got a hearing.

Now, a change in national accounting standards is forcing states to publicly estimate the cost of these unfunded perks in their books by 2008. State Auditor Connie Nass put out a bid to get an actuarial study done on what this lifetime health insurance perk could cost taxpayers in future years.

Nass chose a bidder and drew up a contract, but the Indiana State Budget Agency announced Tuesday that they would not sign off on the study.

Posted by Marcia Oddi on December 8, 2006 08:43 AM
Posted to General Law Related | Indiana Government | Legislative Benefits