“U.S. public pension systems, facing as much as $3 trillion in unfunded promises to current and future retirees, are resisting proposed new standards that might double their funding deficits,” says Bloomberg News of local and state pension liabilities.
“Investment losses in 2008 and 2009 left state and local pensions with $3.6 trillion in unfunded obligations, according to an October 2010 study by Joshua Rauh of Northwestern University and Robert Novy-Marx of the University of Rochester. By last month, states had 74.6 percent of assets needed to fulfill obligations, down from 82.8 percent in 2007, according to data compiled by Bloomberg.”
“The Governmental Accounting Standards Board, a private organization that sets bookkeeping rules used by cities and states, is considering changes that would magnify the unfunded liabilities of many pension funds. The new standard would widen the gap for the California State Teachers Retirement System to as much as $150 billion from $56 billion under a “very, very rough estimate,” according to Ricardo Duran, a spokesman for the second-largest public pension. The rules may imperil school district bond ratings by adding pension liabilities to their balance sheets for the first time, according to the California School Boards Association.”
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