The Governmental Accounting Standards Board (GASB) issued two new financial reporting standards in 2012. The new standards, GASB 67 and 68, changed the way governmental pension plans and their participating employers account for and report pension liabilities and expenses in their financial statements. The objectives of the standards are to:

  • Improve accounting and financial reporting by state and local governments for pensions.
  • Enhance the transparency of pension-related information in financial reports of governmental employers.
  • Increase consistency and improve accountability.
  • Standardize actuarial valuation practices.

GASB 67 — Impacts STRS Ohio

GASB 67 amends previous standards to improve the reporting by state and local governmental pension plans, such as STRS Ohio. These changes apply to STRS Ohio’s Annual Comprehensive Financial Report beginning with the fiscal year ending June 30, 2014.

GASB 68 — Impacts Employers

GASB 68 establishes accounting and financial reporting requirements related to pensions for governmental employers whose employees are provided with pensions from pension plans covered by GASB 67 (such as STRS Ohio, a cost-sharing multiple-employer plan). For STRS Ohio employers, it establishes standards for measuring and recognizing the employer’s proportionate share of the net pension liability, pension expense, and deferred outflow and deferred inflow of resources.

These standards must be applied to employer financial reports in fiscal years beginning after June 15, 2014. For most STRS Ohio employers, the standard applies to years ending June 30, 2015, and later.

Contribution rates and funding requirements are not impacted by GASB 68. Under Ohio law, STRS Ohio employers contribute to reduce the liability over a long period of time through a portion of the employer contributions. Due to pension reform changes, STRS Ohio expects the retirement plan’s funding to improve over time, which would lower the liability.

The State Teachers Retirement Board began planning to strengthen the financial condition of the system in 2009. The process concluded when the Ohio Legislature passed Substitute Senate Bill 342 in 2012. The Ohio 130th General Assembly passed House Concurrent Resolution No. 40 “to acknowledge the Governmental Accounting Standards Board Standards 67 and 68 and to pledge the General Assembly’s continued support of Ohio's public employers and retirement systems in their mission to provide secure and sustainable retirement, disability and survivor benefits to Ohio's public employees.”

GASB 68 Requirements

  • Effective: Fiscal years ending June 30, 2015, and later
  • Replaces: GASB 27
  • Primary impact: STRS Ohio employers must report their proportionate share of STRS Ohio’s net pension liability and annual expense in their financial statements.

STRS Ohio is a cost-sharing multiple-employer plan. All STRS Ohio employers who prepare published financial statements on an accrual basis using generally accepted accounting principles (GAAP) are required to adhere to the standards of GASB 68.

GASB 68 requires employers to include a proportionate share of STRS Ohio’s net pension liability and annual expense in their financial statements for fiscal years ending June 30, 2015, and later. Employers are also required to include extensive disclosures in the notes to their financial statements.

Historically, GASB viewed an unfunded pension obligation as a future liability rather than as an existing one, allowing information about the total liability to be disclosed in required supplemental information. A shift to an accounting-based approach from a funding-based approach now requires employers to report their share of the unfunded liability of the entire pension plan on their balance sheets.

STRS Ohio’s net pension liability is calculated as the difference between the plan’s net assets and the total obligations to plan participants as of a specific measurement date. The measurement date is a plan valuation date selected by the employer to report their share of the net pension liability in their financial statements.

Employers can choose a measurement date of June 30 of the prior or current fiscal year. The decision to use either prior or current fiscal year values is permanent and cannot be changed. For example, if an employer used prior fiscal year values for their 2015 financial statements, they must continue to use prior fiscal year values each year thereafter.

Note: The employer’s proportionate share of the net pension liability, pension expense, and deferred outflow and deferred inflow of resources may represent a significant impact on employer financial statements. The standards only impact financial reporting and do not impact the amount employers are required to fund under Ohio law. Employers will continue to pay contribution rates as defined in Ohio statute.


Each year, STRS Ohio will prepare and provide an allocation schedule and a pension amount schedule to assist employers with the preparation of their financial statements. These schedules will be available in Employer Self Service (ESS) approximately eight to nine months after the measurement date. View instructions for accessing GASB reports in ESS.

Compliance with GASB 68 requires additional effort on the part of STRS Ohio and each of its nearly 1,200 employers. It also requires coordination with the external auditors of STRS Ohio and the employers. STRS Ohio is committed to assisting all of our employers in understanding and implementing these standards, as well as communicating the information necessary for employer financial reporting.

Please email us if you have questions about the reports or the implementation. You may also need to contact your independent auditor or accountant to discuss the effect these changes will have on your internal accounting processes and annual audit.