Changes in government accounting standards mean many of the nation’s public employee pension funds will have to show they owe more money on their books than they’re currently reporting.
The changes likely will have only a small impact on Georgia’s retirement fund, however.
The new Governmental Accounting Standards Board rules are supposed to make pensions’ financial reports more accurately reflect what they actually will have to pay retirees. A preliminary analysis by Boston College’s Center for Retirement Research shows pension funds across the country are only about half funded using the new standards. Under current accounting, they’re about three-quarters funded.
But in Georgia, the state retirement systems are 85 percent funded, according to the Pew Center on the States.
“[Georgia is] well-funded in terms of their pensions and they’ve been making their contributions, which certainly is a big factor in how these new discount rates go into effect,” said David Draine, a senior researcher at Pew. “Broadly, they will not have that same level of changes that we’ll be seeing in some of the more poorly funded states.”
“If you’re making contributions, if you’re putting money into the system, if you’re projecting to close your funding gap over time, you’re not going to trigger this rule, you’re not going to have to take part of your liabilities and discount them at a lower rate,” Draine said.
That means Georgia shouldn’t have to show as large an increase in its pension liabilities as some other states, like Illinois and Kentucky.
In the Center for Retirement Research report, the new accounting rules would drop the funding level for the state employees’ pension to 78 percent; the teachers’ pension fund would fall to 72 percent.