The ARC is the employer’s periodic required contribution to a defined benefit OPEB plan. The ARC is the sum of two parts: (1) the normal cost, which is the cost for OPEB benefits attributable to the current year of service, and (2) an amortization payment, which is a catch-up payment for past service costs to fund the Unfunded Actuarial Accrued Liability (UAAL) over the next 30 years.

Under GASB 75, it is not required that entities actually pay the ARC each year, but it does need to be calculated and disclosed in the public employer’s annual financial statements.