NJ OPEB Update – 2020

There are three separate reports for state, local government, and local education which throw a lot of distracting numbers at you but, when added up, show that after an amazing 1/3rd reduction in the total OPEB Liability (from $110 billion as of 6/30/16 to under $74 billion as of 6/30/19) the state actuaries sharply reversed course.

Here is how they did it.

 

From 6/30/16 to 6/30/19 there was a $54 billion reduction due to ‘Differences Between Expected and Actual Experience’ and ‘Changes of Assumptions’. Who has been choosing the assumptions you may ask. From the cover letter to the reports:

The Plan Sponsor selected the economic and demographic assumptions and prescribed them for use for purposes of compliance with GASB 75.

From 6/30/19 to 6/30/20 there was a $47 billion increase due to ‘Differences Between Expected and Actual Experience’ and ‘Changes of Assumptions’. Why would the Plan Sponsor want to suddenly make these benefits appear more valuable?