An increasing debt owed on pension costs and liabilities seems to be the unvarnished shocker emanating from the digital pages of the California State Controller’s recent audit release, nearly $90 billion apparently, per the newly required pension-related Governmental Accounting Standard Board (GASB) statements of fiscal truth.
‘Restated’ fiscal reality
The audit evidence might be seen as disheartening for many state employees given promises from elected officials in charge of running the legal and executive end of California. From the “Management’s Discussion and Analysis” portion of California’s Comprehensive Annual Financial Report (CAFR), the tragic situation was evaluated. “Although current year activity reflects a combined $15.8 billion increase in the primary government’s net position, net position at the beginning of the year was restated as a result of the recognition of net pension liabilities associated with the implementation of GASB Statements No. 68 and No. 71, Accounting and Financial Reporting for Pensions….”
According to a post over at PublicCEO online, the shiney truth isn’t pretty. The debt owed to public employees totals $89.9 billion. That figure includes a $63.7 billion net pension liability, a $22.3 billion retiree health care obligation, as well as about $3.9 billion “…. owed for compensated absences.”
Under the old rules, the people did not get to see the entire fiscal story. Per the PublicCEO post, “[f]ollowing the old rules, the Comprehensive Annual Financial Report last year only reported the pension debt for single-employer state plans, a $3.2 billion obligation for judges and a closed plan for legislators. The new report this month for the fiscal year ending last June 30 includes the debt for the five plans in the main CalPERS fund, $39.4 billion, and the state share of more than a third of the CalSTRS debt, $22 billion.”
Vista, CA CAFR
Per the “Management’s Discussion and Analysis”section of the city of Vista’s CAFR, GASB 68 also shines a light on the liability issue. “Long-term liabilities had a net increase of $41,476,740, or 31.6 percent, as compared to the prior year,” according to the auditors Lance, Soll and Lunghard, LLP. “This is primarily due to the implementation of Governmental Accounting Standards Board (GASB) No. 68, Accounting and Financial Reporting for Pensions. GASB 68 requires governments providing defined benefit pensions to recognize their long-term obligation for pension benefits as a liability for the first time. The combined governmental and business-type activities net pension liability is $43,025,603.”