GASB 68: How Will State Unfunded Pension Liabilities Affect Big Cities?

Source: Alicia H. Munnell, Jean-Pierre Aubry, Center for Retirement Research at Boston College, SLP#47, January 2016

From the key findings:
– New accounting provisions – GASB 68 – require localities in state cost-sharing plans to report their share of the plan’s unfunded liability on their books.
– This change severely increases the unfunded liabilities of the affected cities, though the states’ unfunded liabilities drop by a corresponding amount.
– The impact on our full sample of 173 cities is much more modest, because the 92 affected cities are small.
– The big question is whether cities with a portion of the state plan’s burden on their books have a greater interest in reducing the unfunded liabilities.