City of Oakwood, Ohio

accounting; however, the nature of Ohio’s statewide pension / OPEB plans and state law governing those systems require additional explanation to properly understand the information presented in these statements. GASB Statements No. 68 and 75 require the net pension liability and the net OPEB liability (asset) to equal the City’s share of each plan’s:

1. Present value of estimated future pension/OPEB benefits attributable to active and inactive employees’ past service; and
2. Minus plan assets available to pay these benefits.

GASB notes that pension and OPEB obligations and assets, whether funded or unfunded, are part of the “employment exchange”— that is, the employee is trading his or her labor in exchange for wages, benefits, and the promise of a future pension and other postemployment benefits. GASB noted that the unfunded portion of this promise is a present obligation of the government, part of a bargained‐for benefit to the employee, and should accordingly be reported by the government as a liability since they received the benefit of the exchange. However, the City is not responsible for certain key factors affecting the balance of these liabilities. In Ohio, the employee shares the obligation of funding pension and OPEB benefits with the employer. Both employer and employee contribution rates are capped by State statute. A change in these caps requires action of both Houses of the General Assembly and approval of the Governor. Benefit provisions are also determined by State statute. The Ohio revised code permits, but does not require the retirement systems to provide healthcare to eligible benefit recipients. The retirement systems may allocate a portion of the employer contributions to provide for these OPEB benefits.

The employee enters the employment exchange with the knowledge that the employer’s promise is limited not by contract but by law. The employer enters the exchange also knowing that there is a specific, legal limit to its contribution to the plans. In Ohio, there is no legal means to enforce the unfunded liabilities of the pension and OPEB system as against the public employer. State law operates to mitigate/lessen the moral obligation of the public employer to the employee, because all parties enter the employment exchange with notice as to the law. The retirement system is responsible for the administration of the pension and OPEB plans.

Most long‐term liabilities have set repayment schedules or, in the case of compensated absences (i.e. sick and vacation leave), are satisfied through paid time‐off or termination payments. There is no repayment schedule for the net pension liability and net OPEB liability. As explained above, changes in benefits, contribution rates, and return on investments affect the balance of these liabilities, but are outside the control of the local government. In the event that contributions, investment returns, and other changes are insufficient to keep up with required payments, State statute does not assign/identify the responsible party for the unfunded portion. Due to the unique nature of how the net pension liability and net OPEB liability are satisfied, these liabilities are separately identified within the long‐term liability section of the statement of net position.

In accordance with GASB Statement No. 68 and GASB Statement No. 75, the City’s statements prepared on an accrual basis of accounting include an annual pension expense and an annual OPEB expense for their proportionate share of each plan’s change in net pension liability and net OPEB liability, respectively, not accounted for as deferred inflows/outflows.

For 2024, the City’s assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by a total of $54.05 million. This represents an increase of 7.78% from the prior year.