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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

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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.”