The Governmental Accounting Standards Board issued Statement 45 requiring state and local governments to report other post-employment benefits similar to the way they report pensions on annual financial statements.

Traditionally, government employers reported OPEB costs on a pay-as-you-go basis. Each year, the employer paid the cost of retiree benefits in that year. GASB 45 put an end to that practice. Organizations must now calculate and record the cost of OPEB earned by employees during the time they were actually employed. These required calculations include determining the annual required contribution and the difference between the ARC and the amount actually contributed (net OPEB obligation).

While the statement does not require employers to fund the ARC, the liability (if not funded) will appear on the annual financial statement as a Net OPEB liability. As the net OPEB liability continues to grow, this unfunded liability could harm a government's bond rating and its ability to borrow money.

If government employers decide to fund their OPEB costs, they must do so through an irrevocable trust.