The Government Accounting Standards Board passed regulations requiring state and local governments to keep more honest records of unfunded pensions. The Wall Street Journal reports:
“State and local governments will have to add hundreds of billions of dollars in retiree obligations to their books under rules enacted Tuesday that spotlight the growing costs of health insurance and other benefits owed to former municipal employees.
The new rules approved unanimously by the Governmental Accounting Standards Board, which sets accounting rules for states and municipalities, will require governments to carry their unfunded retiree-benefit obligations on their balance sheets—thus making their overall financial position look worse. Currently, governments are required only to disclose the benefit costs in the footnotes to their financial statements.”
Full public disclosure of the true costs of benefits to city and state workers is an indispensable tool of public management and good governance. It’s astonishing that it’s taken this long to get something this simple done, but both politicians and union leaders don’t want public scrutiny of these deals. This transparency is only the first step, however. Getting a more accurate picture of how bad state and municipal finances is one thing, fixing those finances another. With luck, the newly available records will increase pressure for reform.