The Impact of Governmental Accounting Standards on Public-Sector Pension Funding
By Divya Anantharaman, Elizabeth Chuk The funding policy for defined benefit pension plans covering government employees represents an important decision for government entities sponsoring those plans. In recent years, a number of state and local governments have experienced extreme funding shortfalls (e.g., New Jersey, Illinois, and Detroit), raising concerns about whether government entities are contributing enough to their pensions. Governmental Accounting Standards Board Statements Number 67/68 (hereafter, “GASB 67/68”) fundamentally alter the financial reporting of pension liabilities, by (i)...