The implementation of new rules by the Governmental Accounting Standards Board (GASB) represent significant changes in how retirement systems report pension liabilities.
To examine the effects of the reporting changes, Governing compiled financial data for 80 state and local pension systems that had published reports for fiscal year 2014. Figures reported in fiscal year 2013 using GASB 25 standards were compared to fiscal year 2014 figures reported under the new GASB 67 standards. The funding status improved for the majority of systems reviewed, mostly as a result of strong investment returns. Fifteen of the systems now, though, appear less funded under the new standards. More than a third of the plans reviewed also revised down their discount rates used to estimate total liabilities.
Select a pension plan below to compare its 2014 financial data to the prior fiscal year. Please note that systems use different valuation dates to estimate total liabilities and assets. A few systems also implemented other changes affecting reported funding levels.SOURCE: Governing analysis of pension data obtained from retirement system financial reports
While the majority of the 80 plans reviewed recorded declines in reported unfunded liabilities between fiscal years 2013 and 2014, a few saw liabilities jump significantly. The following reported the largest percentage increases in unfunded pension liabilities:
|Pension Plan||Change in Unfunded Liability||2013 Unfunded Actuarial Liability (under GASB 25)||2014 Unfunded Actuarial Liability (under GASB 67)|
|New Jersey Teachers||129.2%||$23,039,505||$52,812,800|
|Texas Law Enforcement and Custodial Officer Supplemental Retirement Plan||119.5%||$306,695||$673,100|
|New Jersey PERS: State Employees||106.7%||$10,802,000||$22,326,500|
|New Jersey Police & Fire||73.4%||$8,869,518||$15,379,800|
|Kentucky Teachers' Retirement System||55.9%||$13,854,474||$21,592,205|
|Arizona State Retirement System||55.7%||$9,502,000||$14,796,602|
|Arizona Public Safety Personnel Retirement System||44.5%||$4,359,280||$6,297,493|
|New Jersey PERS: Local||43.3%||$7,031,000||$10,073,300|
|Pennsylvania School Employees||21.4%||$32,598,554||$39,580,717|
About one-third of plans surveyed lowered their expected rate of return in 2014, while the vast majority kept or improved their assumptions about their long-term investment return.
A Governing analysis shows how a new accounting rule dramatically changes some plans' pension liabilities and will likely force many states to finally face their obligations.