July Web Platform
In May, Texas passed a law blocking the Norwalk, Conn.-based Governmental Accounting Standards Board’s (GASB) new rule requiring governments to disclose their expected costs for retired workers’ health care. Last month, the Connecticut House of Representatives passed a bill that could give the state’s comptroller liberty to follow generally accepted accounting principles rather than the board’s. Officials in Connecticut say GASB’s rules make it too difficult to balance the state budget.
American City & County asked readers of its weekly e-mail newsletter if they think GASB has gone too far in requiring state and local governments to account for retirement benefits. Below are some of the responses:
“Yes, GASB is going too far. It is widening a disconnect between governmental budgeting and audited financial reports. For example, GASB No. 45 – the new OPEB statement – will require governments to recognize an expense and a liability for ‘implied’ employee subsidies, which are in no way paid by the government. This makes no sense. On GASB’s current agenda is a proposal to require governments to account for ‘non-financial” assets as if they were in fact capital assets, and apply all the rules of GASB No. 34 to them, just like infrastructure. This makes no sense, since governments often receive things like rights of way and easements as donations from developers, and often these items can revert back to the developer if certain things do not happen. So the government may have no real asset at all. These are just two examples of how GASB is going too far. These non-cash charges and liabilities are making audited financial statements less useful and less representative of reality for local governments and their elected officials.”
— John Pryor, director, Broward County, Fla., Accounting Division
“Hiding the ball has never benefited the public and I doubt it will now. The GASB rule for retirement benefits clearly explains the present and future costs of the benefits that we have given to our employees. If we managed well, the new rules will showcase our ability to maximize our financial resources and maintain the public’s confidence. If we have not managed well, ignoring our financial reality will not keep us employed or respected. The private sector has led on this issue and is already making the tough business decisions it needs to remain competitive. Therefore, we have precious little time to address our local concerns before a few governments earn the spotlight for their reckless behavior and the general public paints us all with the same brush. As managers, we should support GASB’s ‘Perform or Perish’ rule.”
— John Lampl, city manager, Morrow, Ga.