Cities, states and the millions of Americans who work for them will soon face new accounting rules that will require many local governments to disclose pension obligations that were hidden until now, stepping up the pressure to rein in public workers' benefits, the New York Times reported today. The new rules are the result of more than five years of work by the Governmental Accounting Standards Board on one of the most contentious topics the agency has ever tackled. The current rules have been criticized for making pensions look more affordable than they really are and creating incentives for governments to take undue risks with taxpayer money. The controversy centers on the way governments measure their future payments to retirees in today's dollars, a common financial calculation known as discounting. The accounting board has devised a method that will require severely depleted pension funds to factor in the likelihood that they will run out of money at some point, and have to borrow to pay retirees their benefits. Healthier plans will be allowed to discount future payments as they do now.
