This issue of GRS Insight is intended to provide a detailed explanation of many of the changes established under the GASB’s new standards. The new standards significantly change current pension accounting and reporting standards for state and local governments by:

• Disconnecting state and local governmental pension accounting measures from the funding measures used to determine pension contributions;

• Requiring employers to recognize an unfunded pension obligation (i.e., the "net pension liability") as a balance sheet liability in their government-wide basic financial statements. Moreover, the unfunded liability is based on the market value of assets rather than a smoothed value;

• Requiring employers to recognize a new measure of the pension expense that may have little relation to the actuarially determined contribution; and

• Replacing most of the current financial note disclosures and required supplementary information with information based on the new measures.