New Disclosure Rules for Public Employers by LawCrossing

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All About Public Employers Rules Disclosure With Information About Legal Work Influx, Post-Employment Benefits, Government Accounting Standards Board, Unfunded Financial Liability, Public Finance Group And More.

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									GCC NEWS FEATURE                                                                                       www.lawcrossing.com      1. 800.973.1177




New Disclosure Rules for Public Employers
[By Jen Woods]
As new accounting rules go into effect for public employers, lawyers can expect an influx of legal work.




The new disclosure rules require public            private employers because they offer more           Like other firms, Nixon Peabody, which
employers to report the amounts of money           retiree benefits. About 77% of governments          has extensive experience in public finance,
they owe in post-employment benefits,              with more than 200 employees offer                  SEC disclosure, employee benefits, labor
including healthcare, life insurance, and          healthcare benefits to retirees, while only         relations, and health services, has developed
dental coverage costs, for their current           36% of similarly sized private employers            an OPEB (other post-employment benefits)
and future retired workers. In addition,           offer them, according to a recent Kaiser            taskforce. The legal team will help public
employers will have to disclose how they           Family Foundation survey.                           employers understand the implications of
plan to pay for benefits.                                                                              the new rules, as well as create strategies to
                                                   In addition, the cost of healthcare has             manage OPEB challenges.
The new Government Accounting Standards            increased dramatically for governments.
Board (GASB) rules were implemented in             The cost of providing employee healthcare           In preparation for the new disclosure rules,
part because employee pensions in the              increased by an average of 4.2% per year           Nixon Peabody has held seminars and
private sector have been on the decline. The       between 2000 and 2004-a fairly significant          attended conferences on the issue. The firm
new accounting rules, adopted by the private       increase when compared with an average              is currently hosting “OPEB labs” with public
sector in 992, will significantly impact many     overall expenditure increase of 5.5% and            employers nationwide. These meetings bring
employers’ financial outlooks. The disclosed       an inflation rate of 2.4%-according to the          senior municipal managers from around the
figures will affect employers’ credit rating       results of a 2004 Fitch Ratings study.              country together to discuss their situations.
scores, which will ultimately affect their
ability to take out loans.                         Depending on the size of the public                 Vinson & Elkins has also created an OPEB
                                                   employer, the new rules will go into effect         taskforce, which consists of 0 lawyers who
“The unfunded financial liability facing nearly
                                                   at different times. For instance, larger            specialize in corporate governance, public
every state and local government is huge,
                                                   entities with annual revenues greater than          finance, public policy, employee benefits, and
and yet many officials may not even know this
                                                   $00 million must start disclosing their            labor law. The legal team works directly with
new rule exists,” said former Dallas Mayor
                                                   unfunded liabilities for post-employment            state and local leaders to help them evaluate
Ron Kirk, now a partner in the public policy
                                                   benefits beginning December 5. For public          financial obligations.
and public finance group of Vinson & Elkins,
                                                   employers with annual revenues of $0
LLP. “I cannot overstate the seriousness
                                                   million to $00 million, the new rules will         ON THE NET
of the economic impact this will have on
                                                   go into effect after December 5, 2007. The
governmental entities both big and small.
                                                   smallest entities, those with annual revenues       U.S. Securities and Exchange Commission
The size of the liability is going to astonish
                                                   of $0 million or less, will begin reporting        www.sec.gov
taxpayers and government officials,” he added.
                                                   one year later, after December 5, 2008.
                                                                                                       Nixon Peabody, LLP
Some experts estimate that the total
                                                   Attorneys, particularly those who specialize        www.nixonpeabody.com
unfunded liability for retiree healthcare
                                                   in public finance, compensation and benefits,
benefits for state and local governments is
                                                   labor, and taxes, can expect an increase in         Vinson & Elkins, LLP
between $500 billion and $.4 trillion.
                                                   work as public employers begin to comply            www.vinson-elkins.com
                                                   with the rules.
The rise in healthcare costs has impacted
state and local governments more than


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