By Dan Walters
March 15, 2016 – 4:15 PM
- New accounting standards require pension debt to be listed
- Multibillion-dollar unfunded liabilities are emerging
- However, Fresno has state’s only pension fund surplus
Thanks to new accounting standards, California’s state and local governments are being forced to acknowledge tens of billions of dollars in previously obscure debt for unfunded pension liabilities.
The Governmental Accounting Standards Board says that “unfunded actuarial accrued liabilities” should be listed on balance sheets along with the more traditional debts.
As those revised balance sheets began to emerge this year, they revealed some hefty numbers – such as Los Angeles County’s $8 billion-plus unfunded pension debt.
State Sen. John Moorlach, R-Costa Mesa, has been keeping a running tab and says that in just nine large counties, including Los Angeles, total pension debts top $20 billion.
The state government’s balance sheet, which will be released soon, is likely to reveal some particularly big numbers.
A recent report from the state controller pegs “net pension liability” for the state’s public safety and “miscellaneous” employees for the 2012-14 fiscal year at $34 billion on $128.7 billion in pension obligations.
To put it another way, it’s a 26 percent shortfall, and that assumes the state will see a 7.65 percent investment return, which many authorities say is unrealistically high. If earnings are just 1 percentage point lower, the debt balloons to more than $50 billion.
There is one notable, seemingly unlikely, exception to California’s heavy public pension debts – the city of Fresno.
Transparent California, a think tank that tracks fiscal data for state and local governments, declares that Fresno’s pension system “is the only public pension program in California – and one of only a few in the United States – that has a surplus instead of unfunded pension liabilities.”
While Fresno’s pension benefits are still higher than those in local private employment, “they are considerably less inflated than any other pension system in California. They have a surplus, and that’s so different than anybody else.”
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