Cold hard financial reality

August 17, 2012
New accounting rules to expose pension funding gaps
Rick Moran
State and local governments will no longer be able to fudge the numbers on their underfunded pensions for workers. Moody's will issue new guidelines to force governments to report their pension obligations more honestly.

Washington Post:

For the worst-off cities, the new pension debt calculations could mean bond rating downgrades and increased borrowing costs when localities try to raise money for new projects, Moody's has warned.

The accounting changes themselves will not force policymakers to alter how they fund pensions. But finance experts say that by simply highlighting greater funding gaps, the rules will intensify pressure on state and local governments to allocate more of taxpayers' dollars to their pension funds. More likely, public workers may have to contribute more to their retirements or see promised benefits curtailed, measures that have already been implemented in more than 40 states.

Virginia and Maryland have cut benefits for new hires while preserving retirement packages for current employees.

"It is hard to believe that higher numbers would not put increased pressure on governments to deal with this," said Scott D. Pattison, executive director of the National Association of State Budget Officers. "If you only have so many dollars, if you are going to put more into pensions, that means less for other things."

The new rules come at a difficult time for state and local governments struggling with weakened tax revenue and stronger demand for services in the wake of the recession. In addition, states and localities face the prospect of substantial reductions in aid from the federal government beginning in January unless Congress and the White House come up with an alternative to automatic budget cuts.

The shortfall in pension obligations is more than $2 trillion. That's the amount that taxpayers on are on the hook for unless lawmakers find a way to fix their pension systems. Coupled with a huge increase in retiree medical insurance coverage, cash strapped states and local governments have taken to reducing the benefits of new hires while allowing current employees and retirees to maintain their level of benefits.

It won't be enough to stave off disaster. Eventually, the problem will have to be met head on and the entire pension system reworked.

Forget the pension system. Immediately dump all school employees into a 401K and let them take care of their own retirement. Problem solved, except that we will still be employing incompetent teachers like Tacks Know More.

Joe Doakey wrote:

Forget the pension system. Immediately dump all school employees into a 401K and let them take care of their own retirement. Problem solved, except that we will still be employing incompetent teachers like Tacks Know More.

...and reading moronic posts from the likes of you, Illegal Kenyan Obama and Stu Pedaso.

Tacks Know More wrote:

<quoted text>...and reading moronic posts from the likes of you, Illegal Kenyan Obama and Stu Pedaso.

Aren't you the one who said it would never happen in Erie? Well it's happening in PA and will becoming to a district near you soon!

Joe Doakey wrote:

<quoted text> Aren't you the one who said it would never happen in Erie? Well it's happening in PA and will becoming to a district near you soon!

Still making promises that you can't keep there Joe? Still working on releasing my rantings to the media?
STILL NOT WORRIED!

Tacks Know More wrote:

<quoted text>Still making promises that you can't keep there Joe? Still working on releasing my rantings to the media?
STILL NOT WORRIED!

Quite the sad comeback. Good news for you though. With the new Tuition assistance program offered to students in your failing school system you will be left with only the bottom of the barrel students. That will balance things out as the students will be left with the bottom of the barrel teachers of the ESD. Wait till next year and you get your funding slashed for lack of students. You will have to lay off even more teachers and administrators. Your gravey train is crashing as I type this. How amusing! But you said it would never happen in Erie!

Joe Doakey wrote:

<quoted text> Quite the sad comeback. Good news for you though. With the new Tuition assistance program offered to students in your failing school system you will be left with only the bottom of the barrel students. That will balance things out as the students will be left with the bottom of the barrel teachers of the ESD. Wait till next year and you get your funding slashed for lack of students. You will have to lay off even more teachers and administrators. Your gravey train is crashing as I type this. How amusing! But you said it would never happen in Erie!

It won't. You cannot lay off enough teachers to effect me without crippling the entire school system. Even if you COULD there would be a need for teachers in the County system and I'd simply go there and work due to the expanding student enrollment into those schools. We have been over this several times over the summer. Face it, you are jealous and will twist every irrelevant news item to try and make it SEEM relevant to me. I will have a job this year, and next year and the next year after that until I DECIDE it's time to retire. If we were in football, I'd already have "clinched a playoff berth" Sorry. You lose.
Also, it's spelled "gravy" NOT "gravey". Learn to spell dumbass.