The Orange County Register is reporting that "Staff for the Governmental Accounting Standards Board is eyeing a plan to make municipalities report their pensions’ unfunded liabilities on their balance sheets — which are used by lenders to determine an agency’s financial health. Currently, the unfunded liabilities are listed as footnotes." Download GASB standards Pension 11-09
It is argued that such an accounting change would more accurately reflect a municipalities financial strength or weakness. For Nevada County this accounting change would force over $50,000,000 in debt to be moved from a footnoted item to a line item on County financial statements. The $50,094,441 debt associated with the Nevada County Misc Employee pension plan equates to over 25% of our County's current year total budget.
Would entities/banks/investors loan (and at what rates?) money to a muni which openly and transparently listed their unfunded pension and health care benefit debt? Would taxpayers and municipal leaders be as quick to start new programs knowing what impact such growth in service would cost long term? How would muni's attack a problem that has moved from a quiet footnote to a screaming line item?
Note: listed debt to pension plans are 2006 pre-"market crash" figures for MISC employees only (does not include Public Safety) Download NOV_08_NEV_CO_PERS_UL-using 2006 market values
Michael McDaniel December 10, 2009