The Morning Report
Get the news and information you need to take on the day.
The New York Times is reporting today that the Governmental Accounting Standards Board has embarked on an effort to force local and state governments to better inform taxpayers in on the true costs of pensions.
From the Times:
In a public meeting [in Norwalk, Conn.] on Thursday, the Governmental Accounting Standards Board began the project by tackling just this issue: whether the accounting rules must be changed to stop systematically undercounting pension costs. Proponents of sweeping change say the rules now give rise to bad numbers everywhere — not just when governments are cutting corners or making mistakes, but even when the plans are run responsibly.
According to the Times, a recent report by the accounting board’s staff found that cities and states regularly lose track of their pension obligations, give retirees retroactive pension increases and use “skim funds” that allow officials to spend pension money on other things.
Finally, the Times included the obligatory San Diego reference found in almost every pension story:
New Jersey and San Diego had versions of skim funds, and won “excellence in accounting” awards from the Government Finance Officers Association for many years while operating them. Each ended up with far less money in its pension fund than its books showed. The Securities and Exchange Commission found that San Diego had committed securities fraud by overstating the soundness of its pension fund; it is still investigating New Jersey.