Every once in a while GASB will tweak their rules. Almost always this is rather technical stuff, and only those who have an intimate knowledge of the inner workings of City finance will notice what the actual tweaks are, or mean. Except that has now changed. This year they pretty much blew the roof off and changed everything, and quite radically. The financial reporting segments of our City Council meetings may never be the same.
This from Reuters (click here):
Little-known U.S. board stokes hot pension debate - The feedback was swift and often scathing when a little-known public board signaled its intent to toughen the accounting rules governing state and local pension funds of millions of U.S. public employees, intensifying worries over a shortfall of billions of dollars.
The plan by the Governmental Accounting Standards Board (GASB) - which was approved on June 25 - drew praise from the American Institute of Certified Public Accountants and from investors looking for transparency in the $3.7 trillion municipal bond markets.
Apparently this change has a lot of people up in arms. Especially those working for public institutions and governmental organizations that are carrying a lot of pension obligations. Up until now those could be put into the relevant GASB reports in a far more optimistic light than what was perhaps warranted. But no longer. Starting next year pensions have to be stacked in with all the rest of the debt and liabilities, and with no more rose colored glasses to read them by.
In one unanimous vote GASB set in motion changes, termed radical even by supporters, that will force many of the worst-off state and local governments to acknowledge much bigger pension shortfalls as liabilities on their balance sheets, while no longer requiring information about how well they are funding those promises. The rules will add volatility to the funds by eliminating the "smoothing" of their liabilities over time, and will impose new accounting costs on already strapped governments.
The new GASB rules don't alter what's owed, but will make some dramatic changes to the accounting value of liabilities. Underfunded pensions will no longer be able to use the projected rate of return on their investments, currently abut 8 percent, to value their liabilities. Instead, any unfunded promises will have to be valued at a far lower rate, close to what it would cost them to borrow the money to cover the debt.
As dry as this might seem to some, this is all very big news. What GASB is imposing here is a standard that brings with it a far greater level of transparency than what we see now, especially in regards to pension debt. No longer will cities be able to report money they haven't earned yet through investments as payments towards pensions. Rather their numbers will have to pretty much reflect things as they really are, and without any undue optimism.
Something that will make it far more difficult for politicians to offer public sector employees the kinds of pensions and retirement benefits that are only a dream for most in the private sector.
The Brown Act Lives In L.A. County
There was a nice little article in yesterday's Pasadena Star News (click here) dealing with the Brown Act and the L.A. County District Attorney's burning desire to enforce it. And none other than Dave Demerjian, the guy who now proudly wears the scalps of ex-COG bossman Nick Conway, along with Richard Van Pelt, formerly of the Sierra Madre CRA Dissolution Board, is vowing to bring all Brown Act violators to justice.
Prosecutors train public on open meeting law - The Los Angeles County District Attorney's Office had a message Wednesday for city councils and other bodies subject to the state's open meeting law: comply with the law or risk prosecution.
Of the 514 Brown Act complaints received since 2001, 18 percent have turned out to be violations, the DA Public Integrity Division's Head Deputy Dave Demerjian told attendees at an educational forum on the issue.
"We feel the Brown Act is very clear. We don't believe in gray areas," Demerjian told some 200 attendees at the forum, which was presented by the County Prosectors Association and District Attorney's Criminal Justice Institute at the Metropolitan Transportation Authority.
Sometimes I can actually believe there might be some hope for this part of the world. Then there is also this:
Wednesday's forum was held one day after open government activist Gil Aguirre of San Dimas asked the Monrovia City Council to acknowledge and correct an alleged Brown Act violation that occurred last December. Council members and then-City Manager Scott Ochoa, who now works in Glendale, discussed his desire to modify his home loan from the city in closed session.
Gil Aguirre's name is beginning to become quite a prominent one in our corner of the San Gabriel Valley.
Today is Chief Black Kettle Day at The Tattler
Noted often for his cleverly phrased and thoughtful comments on this blog, The Chief is celebrating his 70th birthday today. In honor of this achievement in longevity we here at The Sierra Madre Tattler are awarding him our coveted "Banner Of Truth" award for his courageous service to the honorable causes of muckraking and annoying all of the right people. It is leaning against the washing machine in the newly renovated Maundry garage, and he is free to pick it up at any time.
Our congratulations go out to Chief Black Kettle. May his day be one filled with joy.