Funded Status of Local Pensions per CSLGE – 2018

Based on an analysis of 190 major pension plans (114 state and 76 local) that represent over 95 percent of total U.S. state and local pension assets and membership, the Center for State and Local Government Excellence (CSLGE) released a brief concluding:

Fundamentally, the path of the funded ratio for public plans depends upon the growth of actuarial assets relative to the growth of actuarial liabilities. Liability growth slowed dramatically from 2001 to 2018, but still exceeded asset growth over the period – driving down the funded ratio from 103 percent in 2001 to 73 percent in 2018. While more stringent funding methods would have modestly improved the trajectory of plan assets from 2001 to 2018, significant change requires also using a lower assumed return.

Nothing alarming here (though significantly less upbeat than the last update) but that might have more to do with CSLGE’s funding than those of the plans. A footnote accounts for that rosy 73 percent figure:

4….Prior to 2014, public pension plans used the traditional Governmental Accounting Standards Board rules (GASB 25) to measure assets and liabilities for both accounting and funding purposes. New GASB rules introduced in 2014 (GASB 67) included significant changes to the measures of assets and liabilities for accounting purposes only. This report focuses on assets and liabilities measured under traditional GASB 25 standards because plans still use them for funding, and they allow for continuity with historical trends. For an update of the funded status based on new GASB 67 standards, see Appendix B.

10 responses to this post.

  1. Posted by Tough Love on October 4, 2019 at 11:13 am

    GASB 67 is still a joke, because it allows using the assumed investment rate for discounting Plan liabilities until such year (usually MANY years into the future) that Plan assets completely run out.

    To properly account for investment risk, Public Sector Plan liabilities should be discounted Plan liabilities using a far more conservative rate (e.g high grade Corporate Bonds) ……. just like PRIVATE Sector Plans are required to use in their valuations and funding calculations.

    Reply

    • Posted by Rex the Wonder Dog! on October 4, 2019 at 1:27 pm

      There should be no difference in the discount rate of private or public pension plans, period. This is not rocket science, just plain simple 2+2=4 math.

      Reply

    • Nothing new. Shut the fuck up. You’re boring the hell out of us. 😴😴

      Reply

      • Not Rex. Directed at TL. Just so we are clear of what I think of her.

        Reply

        • Posted by stanley on October 5, 2019 at 10:31 am

          Lighten up Constable! We’re all friends here. LOL Oh! And also have a good day. You’re probably busy watching the cars go by. Right? You’re getting nice fall weather, right? A lot to be thankful for.

          Reply

          • You and I maybe can get past the fact that I “get a pension” , she can’t. You and I can respectfully disagree and not make it the centerpiece of our lives. Lol. She can’t.
            Btw. Penn state looked awesome last week and should cover today.
            It is a beautiful fall day here. Lots to be thankful for.
            She sees herself as an us vs them issue and sees me as her adversary. Everyone else on here seems to get along just fine.

            Reply

          • And see how you said, and have a good day? She would NEVER say that to anyone on here. Especially me. Screw her Stanley. She sucks.
            Enjoy your day as well.

            Reply

  2. Posted by MJ on October 5, 2019 at 1:00 pm

    El G I thought you and TL were back on? I thought you were coming around?

    Reply

  3. No. She wasn’t open to that. For her it’s all insults. Like I said, I don’t think she is a very nice human being all around. Unlike most of us on here.

    Reply

  4. Posted by Tough Love on October 5, 2019 at 5:18 pm

    Lol …………. I post this:

    “GASB 67 is still a joke, because it allows using the assumed investment rate for discounting Plan liabilities until such year (usually MANY years into the future) that Plan assets completely run out.

    To properly account for investment risk, Public Sector Plan liabilities should be discounted Plan liabilities using a far more conservative rate (e.g high grade Corporate Bonds) ……. just like PRIVATE Sector Plans are required to use in their valuations and funding calculations.”

    And El gaupo responds with this:

    “Nothing new. Shut the fuck up. You’re boring the hell out of us.”
    __________________________________________________

    Who is the one with an anger problem (and in need of some stronger meds) ?

    Reply

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