WEST SACRAMENTO, Calif. – The following statement is attributable to California State Teachers’ Retirement System (CalSTRS) Director of Corporate Governance Anne Sheehan:
“While CalSTRS is disappointed Trian did not prevail in their bid to seat a slate of nominees to the DuPont Board of Directors, we are encouraged by the changes Trian Partners have driven at the company. DuPont has acted on many of Trian’s early recommendations and, as partners with Trian, we are prepared to work from the outside toward long-term growth in collaboration with the board.
The Governmental Accounting Standards Board issued two new accounting standards that significantly change the way pensions are reported. Statement No. 67, Financial Reporting for Pension Plans, was implemented by CalSTRS in its fiscal year 2013-14 financial statements. Statement No. 68, Accounting and Reporting for Pensions, is effective for plan employers in fiscal year 2014-15.
Under previous standards, the pension obligation calculated for funding purposes and financial reporting were closely aligned. The new standards break the link between funding and financial reporting by moving from an approach that focuses on the process by which employers finance their future projected cash outflows for pension benefits, to one that stresses the obligation an employer incurs through the employment-exchange process. Significantly, the employers’ collective pension obligation, which was previously only disclosed in the notes to CalSTRS financial statements, will be reported as a liability in the employers’ financial statements.
The employers’ collective pension obligation is referred to as the Net Pension Liability. CalSTRS reported a Net Pension Liability for the State Teachers’ Retirement Plan of $58,437 million as of June 30, 2014.
CalSTRS is actively communicating with our employers regarding the new accounting standards through a variety of methods including:
Employer Information Circulars
Employer Advisory Committee
For more information please see the GASB Statement Nos. 67 and 68 FAQs or contact Art Martinez at AMartinez@CalSTRS.com.
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