nasact teleconference: the new statistical section dean michael mead, gasb the opinions expressed...
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NASACT Teleconference:NASACT Teleconference:NASACT Teleconference:NASACT Teleconference:
The NewThe NewStatistical SectionStatistical Section
The NewThe NewStatistical SectionStatistical Section
Dean Michael Mead, GASB
The opinions expressed here are those of the presenter. Official positions of the GASB are established only after thorough due process and deliberation.
Overview
• Reasons for the new standards
• A whirlwind tour of the new standards
• Implementation issues
Reasons for the New Standards
• Prior standards in place for 25 years
• A lot has changed since then, including Statement 34
• Prior standards provided no detail
• Standards were geared toward general purpose local governments
Five Categories of Statistical Section Information
• Financial trends
• Revenue capacity
• Debt capacity
• Demographic and economic
• Operating
Financial Trends
• Four types of information:– Net assets– Changes in net assets– Fund balances– Changes in fund balances
Revenue Capacity
• Most significant own-source revenue
• Four types of information:–Revenue base–Direct and overlapping rates–Principal payers –Levies and collections
Debt Capacity
• Five types of information:–Ratios of total outstanding debt
–Ratios of general debt outstanding
–Overlapping debt
–Debt limits
–Pledged-revenue coverage
Demographic and Economic
• Two types of information:–Demographic and economic
indicators–Principal employers
Operating
• Three types of information:–Government employees–Operating indicators—demand or
level of service–Capital asset indicators—volume,
usage or nature
Sources, Assumptions and Methodologies
• If it doesn’t come from another part of the financial report (statements, notes, RSI), then source it
• Explain any assumptions you make or methodologies you employ to produce information
Narrative Explanations
• Schedules are more understandable and useful when accompanied by explanations
• Use professional judgment to determine if narrative explanations are needed
• Generally four types:– Objectives of information and schedules– Unfamiliar concepts– Relations among schedules and with other parts
of CAFR– Atypical trends and anomalous data
Effective Date &Transition Provisions
• Effective for periods beginning after June 15, 2005
• Retroactive reporting encouraged, but not required
• Retroactive reporting of new government-wide information back to year of Statement 34 implementation encouraged, but not required
Effective Date &Transition Provisions
• Revision of prior information changed by the Statement is encouraged, but not required– Should at least identify change
Implementation Guidance
• Q&A guide now available
• Over 120 questions and answers
• Includes illustrations of complete statistical sections for:– Local government – County
government– State government – School district– Airport – Public
University– Water & sewer utility – Library district– Retirement system
State of AccountancyPersonal Income Tax Rates,Last Ten Fiscal Years
20X0 20X1 20X2 20X3 20X4 20X5 20X6 20X7 20X8 20X9
Personal Income Tax Revenue a (in millions) $771 $831 $915 $989 $1,113 $1,200 $1,034 $1,033 $1,097 $1,241Personal Income (in millions) $24,360 $25,367 $26,769 $29,068 $31,290 $33,090 $33,963 $34,954 $37,875 $39,726Average Effective Rate b 3.2% 3.3% 3.4% 3.4% 3.6% 3.6% 3.0% 3.0% 2.9% 3.1%
Tax Years 20X0–20X3
Tax Rate 2.0% 4.0% 4.5% 5.5% 6.5% 7.5% 7.5% 7.8% 8.2%Income Bracket (in thousands) $0–1 $1–2 $2–3 $3–4 $4–5 $5–6 $6–7.5 $7.5–20 $20 +
Tax Year 20X4
Tax Rate 1.9% 3.9% 4.4% 5.4% 6.4% 7.4% 8.1%Income Bracket (in thousands) $0–1 $1–2 $2.0–3.1 $3.1–4.1 $4.1–5.1 $5.1–7.7 $20.4 +
Tax Year 20X5
Tax Rate 1.6% 3.6% 4.1% 5.1% 6.1% 7.1% 7.8%Income Bracket (in thousands) $0–1.1 $1.1–2.1 $2.1–3.2 $3.2–4.2 $4.2–5.3 $5.3–7.9 $21.1+
Tax Year 20X6
Tax Rate 1.6% 3.6% 4.1% 5.1% 6.1% 7.1% 7.8%
Income Bracket (in thousands) $0–1.1 $1.1–2.2 $2.2–3.3 $3.3–4.3 $4.3–5.4 $5.4–8.1 $21.7+
Tax Year 20X7
Tax Rate 1.6% 3.6% 4.1% 5.1% 6.1% 7.1% 7.8%Income Bracket (in thousands) $0–1.1 $1.1–2.2 $2.2–3.3 $3.3–4.4 $4.4–5.5 $5.5–8.3 $22.1+
Tax Years 20X8–20X9
Tax Rate 1.6% 3.6% 4.1% 5.1% 6.1% 7.1% 7.8%Income Bracket (in thousands) $0–1.1 $1.1–2.3 $2.3–3.4 $3.4–4.5 $4.5–5.6 $5.6–8.5 $22.6+
Sources: U.S. Bureau of Economic Analysis and State Division of Financial Management.
aTax revenues are presented on a cash basis prior to 20X7. bAverage effective rate equals tax collections divided by income.
Notes: Personal income data for 20X8 and 20X9 income are estimates. The legislature can raise the sales or income tax rates by legislation; no vote of the populace is required. The state's personal income tax brackets are adjusted each year for inflation.
cAmounts shown are for single and married filing separate returns. For all other filing status returns, double the income amounts in the columns.
7.7%$8.5–22.6
7.7%
$8.1–21.7
7.7%$8.3–22.1
7.7%
$7.9–21.1
Fiscal Year
7.7%
$7.7–20.4
Tax Rates on the Portion of Taxable Income in Ranges c
Implementation Issues• Highly complicated rate structures
may make presentation difficult• Possible solutions:
–Use multiple schedules–Focus on characteristics of rate
structure that vary–Present a portion of rate structure
with the most significant impact on determining the rates applied
–Add effective tax rates
Implementation Issues
• Individual income tax filers cannot be identified—how can principal payers be presented?– Present amount paid (or portion of revenue
base) and percentage of total for each payer, but without identifying them
– Provide other information that conveys degrees of concentration in sources of revenue
State of AccountancyPersonal Income Tax Filers and Liability by Income Level,Fiscal Years 20X0 and 20X8(dollars, except income level, in millions)
Personal PersonalNumber Percentage Income Tax Percentage Number Percentage Income Tax Percentage
Income Level of Filers of Total Liability of Total Income Level of Filers of Total Liability of Total
$50,000 and under 483,685 91.41% 358.2$ 48.29% $50,000 and under 520,841 88.64% 430.6$ 40.88% $50,001–$100,000 34,464 6.51 164.7 22.20 $50,001–$100,000 50,543 8.60 278.9 26.41$100,001–$250,000 8,369 1.58 90.6 12.21 $100,001–$250,000 12,745 2.17 156.5 14.87$250,001–$1,000,000 2,306 0.44 73.0 9.85 $250,001–$1,000,000 3,112 0.53 114.6 10.85$1,000,001 and higher 290 0.05 55.2 7.45 $1,000,001 and higher 374 0.06 73.7 6.99
Total 529,114 100.00% 741.7$ 100.00% 587,615 100.00% 1,054.3$ 100.00%
Source: State Tax Commission.
Fiscal Year 20X0 Fiscal Year 20X8
Note: Due to confidentiality issues, the names of the ten largest revenue payers are not available. The categories presented are intended to provide alternative information regarding the sources of the state's revenue. Fiscal year 20X8 is the most recent year for which data are available.
Implementation Issues
• What if personal income information is not available?– If not available at all, use estimated actual
value of taxable property or another relevant economic base to calculate debt ratios
– If not available for most recent years, implementation guide offers suggestions, such as using tentative data (which should be properly noted)
– In general, unavailable data should be indicated as such, not simply left out
Implementation Issues
• What if the required demographic and economic information is not available?– Implementation guide offers suggestions,
such as:• Presenting information for closely overlapping
jurisdictions• Looking for other sources• Estimation (methodologies for estimation should
be described)• Presenting other useful information
Implementation Issues
• The state department of labor won’t identify individual employers– Implementation guide offers suggestions,
such as:• Employment numbers of largest employers, but
without identification• Obtain from another source, such as a chamber of
commerce• Provide other information that conveys degrees of
concentration within the economy
Implementation Issues
• Q: Do we have to start collecting operating indicators and capital asset statistics?
• A: No. Standard specifically requires available measures. But many measures should be readily available from a government’s departments or agencies, which use them to manage operations.
Implementation Issues
• Q: What if we don’t have employee, operating, and capital asset information by functional, programmatic, or identifiable activity expense category?
• A: Show it differently if it will result in a more meaningful presentation to the user of the statistical section
Implementation Issues
• Q: Do pension and OPEB plans have to present both the schedules specifically required for them and the generally required schedules?
• A: Only if the latter schedules are applicable. For example, if a plan has debt, it does the debt capacity schedules.– Plans may present the other schedules
optionally
Implementation Issues
• Q: If a government has a pension or OPEB plan, does it have to present the schedules required for those plans?
• A: No. Those schedule are required only for the separately issued reports of the plans– However, a government may present them
optionally, particularly if the plans do not prepare a statistical section
Implementation Issues
• Q: Does prior information have to be revised to conform to new requirements?
• A: No. GASB encourages revision, but minimally requires prospective implement-ation. However, prior information cannot simply be dropped.– If implementing prospectively, government
should identify point at which information changes and describe nature of the differences
