Pension Accounting – Underfunding Affects AZ Cities

Pensioners First – As of July 1, 2014, new accounting rules require that the balance sheets for Arizona municipalities (towns, cities, counties, state/ state agencies) reflect their true pension obligations.  For employers who contribute to the Arizona Public Safety Personnel Retirement System (PSPRS), this means that the $3-4 billion dollars that the pension doesn’t have, but is obligated to pay to retirees in the future, will now be reported on the employer’s balance sheets.

In sum, this will reflect very negatively on already stressed public safety employers and their parent governments.  Pensioners First does not anticipate any major revelations until the fourth quarter of 2015 or until Arizona governments report their final FY2014-2015 year-end accounting.

http://www.pionline.com/article/20140324/ONLINE/140329949/gasb-votes-against-delaying-reporting-of-liabilities

GASB votes against delaying reporting of liabilities

Government Accounting Standards Board voted unanimously on Monday not to delay the implementation of Statement 68, which affects how governments report their pension fund liabilities, said John C. Pappas, spokesman for the Financial Accounting Foundation, which oversees GASB.

According to an FAF news release, groups representing governments with DB plans called for a delay until “related auditing procedures have been implemented for a sufficient period.”

“The GASB is committed to doing everything it can to assist governments, pension plans and their auditors with the implementation of Statement 68, including working with stakeholder groups,” said David A. Vaudt, GASB chairman, in the news release. “However, the board does not believe that delaying implementation will benefit its stakeholders in general.”

GASB had announced Statement 68 in June 2012, along with Statement 67, “Financial Reporting for Pension Plans.” Statement 67 took effect on June 15, 2013.

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