New Standards Could Cost Wisconsin’s Vaunted Public Pension System
The Government Accounting Standards Board, or GASB, took steps Monday to make reporting of public pension plans more transparent and more in line with private-sector accounting methods. “The new standards will improve the way state and local governments report their pension liabilities and expenses, resulting in a more faithful representation of the full impact of these obligations,” said GASB Chairman Robert H. Attmore in a statement.
Also, unfunded pension liabilities will be reported on public employers’ balance sheets, where they previously were included in the footnotes. The changes come amid heated debate in the pension world over how to calculate future liabilities – pension checks.
Nationally, with the new rules, pension systems move from 76 percent funded to 57 percent funded, according to the Center for Retirement Research, underscoring the public pension crisis hiding beneath the surface of accounting gimmicks.
“Here we are today’s taxpayers, elected officials, employees. We’re taking all the rewards and passing on the risk,” said Jeremy Gold, a public pension actuary and economist. “When we got higher returns (in the 1990s), we simply lowered tomorrow’s costs. The problem now is we’re lowering today’s costs. If the risk pans out, great. But if those risks go bad the future is going to pay for it.”