"Real liberty is neither found in despotism or the extremes of democracy, but in moderate governments.
Alexander Hamilton

Saturday, August 1, 2015

GASB 67 and 68

These refer to a fairly major change in accounting standards from GASB ( Government Accounting Standards Board) number 67 and 68.  Starting later this year, participating employers will begin reporting a proportionate share of the pension liability on their financial statements for the first time.
At last Thursday's BoS meeting, the 2014 audit was presented and the Town was advised of these two accounting changes. The impact to Moultonboo is that in next years financial statement, we will see  pension liability of about $4.5million.
It is important to understand is that this is not a change in the funding formula, it will not impact the tax rate and is not a bill in the sense that employers are being asked to pay down the liability.
Per the NHRS "GASB 67 will change the accounting and financial reporting of NHRS and other public employee pension plans beginning in fiscal years commencing after June 15, 2013 (i.e. fiscal years ending June 30, 2014, or later).
GASB 68 will change financial reporting of participating state and local governments beginning in fiscal years commencing after June 15, 2014 (i.e. fiscal years ending June 30, 2015, or later)."
"The new standards change the way pension plans report financial information for accounting purposes, but do not force pension plans to change their funding policies. This has been referred to as “divorcing accounting from funding.”  
According to GASB;“While this information will, in some cases, give the appearance that a government is financially weaker than it was previously, the financial reality of the government’s situation will not have changed."
The bad news: NH  has the sixth most underfunded pension fund in the nation. In dollars and cents it is approximately $4.5 billion dollars. At some point, we have to come to grips with what is fair to public employees and fair to taxpayers on the hook. Public pensions in NH were very generous on the premise that public employees were paid less than the private sector. That is no longer the case. 

1 comment:

Joseph Cormier said...

COLA's ... also discussed at the last BoS meeting.

"... regarding cost-of-living adjustments (COLAs) and the definition of “earnable compensation.”