State and local governments will have to add hundreds of billions of dollars in retiree obligations to their books under rules enacted yesterday that spotlight the growing costs of health insurance and other benefits owed to former municipal employees, the Wall Street Journal reported today. The new rules approved unanimously by the Governmental Accounting Standards Board (GASB), which sets accounting rules for states and municipalities, will require governments to carry their unfunded retiree-benefit obligations on their balance sheets — thus making their overall financial position look worse. Currently, governments are required only to disclose the benefit costs in the footnotes to their financial statements. In addition, governments will have to use more conservative interest-rate assumptions in calculating the value of benefit obligations that they haven’t funded. That could increase the current value of the obligations, thus worsening the plans’ funding shortfalls. The changes are intended to provide more information to taxpayers, policy makers and municipal-bond analysts, GASB Chairman David Vaudt said.
