Created on Thursday, 03 November 2011 00:00 Published Date Hits: 2131
HELENA – Starting in 2014, Montana’s cities, counties and school districts could get a little fiscal sticker shock attached to their budgets as for the first time nearly $2.3 billion in implied unfunded pension liabilities for state employee retirement plans would have to be listed in order to give investors a full picture of what is owed.
The Governmental Accounting Standards Board (GASB), has proposed to states that in 2014 they must distribute unfunded pension liabilities to local government entities. According to a chart prepared by Stephanie Morrison, a fiscal analyst with the state’s Legislative Fiscal Division, Yellowstone County would have the highest implied unfunded pension liability with $359 million, Missoula $239 million, Flathead $209 million, Cascade $199 million, Gallatin would have $176 million, Lewis and Clark $153 million. On the smaller side, Petroleum would have to list $1.5 million, Treasure $2 million and Prairie $2.7 million.
The news was dire enough to prompt three officials from Yellowstone County to attend the Sept. 30 meeting of the Legislative Finance Committee.
“We don’t have $360 million in our budget to throw into this,” Scott Turner, Yellowstone County finance director, told panel members.
Morrison said GASB proposed the change in an interest for government transparency and to “level the play field for all government agencies.”
She said this did not mean that the unfunded liabilities would have to be funded, but it would give people such as municipal bond investors a full picture of liability.
It could impact bond ratings, officials said, and end up costing local governments more.
Unfunded pension liabilities are when a company pays its pension obligations from current income rather than from a separate fund to which it has contributed over time.
Amy Carlson, head of the Legislative Fiscal Division, told Montana Watchdog the GASB edict could change. And she said the state estimates for counties were a combination of city, school district and county liabilities.
According to its website, GASB is an independent organization that sets standards of accounting and financial reporting for U.S. state and local governments. It is recognized by “governments, the accounting industry, and the capital markets as the official source of generally accepted accounting.”
Yellowstone County Commissioner Jim Reno, who attended the Sept. 30 meeting with Turner and Dan Schwarz, chief civil deputy Yellowstone County attorney, offered his support to the state to remedy the unfunded liabilities.
“This is important stuff,” he said, adding the unfunded liabilities were a growing concern for his county. “We’re here to help.”
Turner said Yellowstone County would like to help the state “achieve fiscal soundness.” He said the past legislative session tried to address pension woes, but did not do enough toward a “defined contribution plan.”
Morrison and Carlson cautioned that the numbers in their report were just estimates of the state’s nine pension systems for government employees. And it was not known when GASB would make a final decision.
“One of the good things about this is that it is bringing it to the forefront of conversation,” Morrison said. “We’re really trying to make this an important topic also.”
Carlson said it was a statewide issue that everyone would have to work together on to resolve.
“There’s a lot more information to come,” she said.