In 2004, the Governmental Accounting Standards Board (GASB) released Statement 45 (GASB 45) concerning health and other non-pension benefits for retired public employees.  These benefits may also be called “other postemployment benefits” and retiree healthcare programs are by far the most costly.

The intent of GASB 45 was to bring governmental accounting standards more in line with private company standards.  Though GASB has no power to change ‘how’ governments fund retiree health, pension and other benefits, it does govern the rules that auditors must follow in providing options on the reliability of governmental financial statements.  Audited financial statements prepared according to GASB are scrutinized by investors in state and local bonds and rating agencies that make judgments on the likelihood those bonds will be paid off is required.