The Government Accounting Standards Board (GASB) recently released Statement No. 45, Accounting and Financial Reporting by Employers for Post‐Employment Benefits Other Than Pensions and its companion Statement No. 43 for pooled stand‐alone health care plans, which will profoundly affect American governmental finance. The goal of this article is to encourage governments to consider carefully a full range of options in funding and restructuring other post‐employment benefits (OPEB). This article will review Statement No. 45's potential impact on governments and review existing disclosures in financial reports as well as bond offering statements. The article will discuss the statement's impact on budgets and governmental operations, including collective bargaining. Funding options under Statement No. 45 will be detailed, including the advantages and disadvantages of irrevocable trusts and OPEB bonds. The article will also discuss the impact of Medicare Part D subsidies received by governments, as well as the bond rating implications of policy decisions surrounding OPEB. As the largest government entities are just now implementing GASB Statement No. 45, estimates of the magnitude of unfunded OPEB liabilities are limited as are the strategies likely to be adopted to cover these obligations. This article offers a summary of the unfunded OPEB liabilities reported by states and major cities and suggests some measures for assessing the ability of these entities to address these costs.

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