GASB 101 compensated absences valuation

Optimizing Foundations measures the compensated absences liability under GASB Statement 101 for states, counties, cities, school districts and authorities. The liability is built from employee-level leave balances and payroll data, with usage and payout rates drawn from the government's own history, and each year's results include a person-level gain and loss reconciliation that explains why the liability moved.

What the standard requires

GASB 101 applies one recognition model to all leave: a liability is recognized for leave attributable to past service that accumulates and is more likely than not to be used as time off or paid in cash or other means. Sick leave expected to be used as paid time off now counts, which is why the liability rose for most governments on adoption. The liability is measured at the pay rate as of the financial statement date and includes salary-related payments such as the employer's share of payroll taxes. The firm's article on GASB 101 explains the standard in detail.

What is included

• Data build. Leave balances by type and employee, pay rates, hire and termination data and the government's payout rules.
• Usage and payout rates. Developed from the government's own history by leave type and employee group, documented so the auditors can see what the estimate rests on.
• Measurement. The liability by leave type and fund, salary-related payments, and the split between the current and long-term portions where the government presents it.
• Reconciliation and disclosure. A person-level reconciliation separating new accruals, leave used, pay increases, assumption changes and population changes, and the net change disclosure the standard permits.

A recent engagement

A public school district engaged the firm for GASB 101 valuations covering two fiscal years. The district's auditors had asked why the liability moved between years. The firm delivered both valuations with a person-by-person reconciliation that attributed the change to pay increases, balance growth and the usage assumption, which closed the audit question without further requests.

Common questions

Is an actuary required for GASB 101? The standard does not require one, but the more-likely-than-not estimate rests on usage and payout experience, and an actuarial approach documents that estimate in the form auditors expect.

Does leave converted to pension service count here? No. Leave settled by conversion to a defined benefit pension or OPEB benefit is measured under GASB 68 or 75 and excluded from the GASB 101 liability, so it is not counted twice.

Every deliverable described here is reviewed by a second credentialed actuary before delivery. This page is general information about the firm's services and is not advice for any specific plan.