Reporting Requirements for Annual Financial Reports of State Agencies and Universities
Notes & Samples
NOTE 25 – Termination Benefits
Termination benefits may result from voluntary or involuntary terminations.
Voluntary termination benefits are intended to hasten an employee’s voluntary termination of services (early-retirement incentives) and may be offered for a short period of time or may be part of a longer-standing offer.
Examples of voluntary termination benefits include:
- Cash payments (one-time or a series)
- Enhancements to defined benefit pension or other postemployment benefit (OPEB) formulas
- Healthcare coverage when none otherwise would be provided
- Healthcare continuation under the Consolidated Omnibus Budget Reconciliation Act (COBRA)
Employers may offer benefits for involuntary termination (such as layoffs). These benefits may include:
- Severance pay
- Continued access to health insurance through the employer’s group insurance plan
- Career counseling
- Outplacement services
- Healthcare continuation under COBRA
Benefits in exchange for employee services (such as a pension or OPEB) are not considered “termination benefits” and therefore not disclosed in Note 25.
Apply professional judgement when determining if the benefit arrangement is a termination benefit or benefits in exchange for employee services. Consider the following:
- Employer’s intent
- How employees generally view the benefits
- If the benefit is conditioned on termination of employment prior to the normal retirement age
- Length of time for which benefits are made available
Submit a copy of the agency’s Note 25 from its published AFR through the ONDSS web application. The required format is a Microsoft Word document (latest version: docx) with header information that includes: agency name/number and note number/name. If Note 25 contains a table, include the table in the Word document — rather than as a separate Excel document or other database application file. If Note 25 does not apply, do not submit a note to indicate “not applicable.”