Posts Tagged ‘opeb’

Criminal Conspiracy or Government Accounting

The 2012 Union County audit is finally out and Note 15 on OPEBs is garbage.  I go into some detail on that item below* but let’s examine the stakeholders that maintain this dysfunctional system of reporting where any number will suffice and no one has an interest in truths that may turn out to be inconvenient:

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Government Accounting or Criminal Conspiracy

The 2011 Union County audit is finally out and Note 15 on OPEBs is garbage*.  I could go into detail on that item but instead, let’s examine the stakeholders that maintain this dysfunctional system of reporting liabilities: accountants,  actuaries, rating agencies, municipal bond buyers, politicians, taxpayers, regulators, public employees.  None have an interest in revealing the truth.

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Can OPEB numbers be trusted?

In theory you should now be able to go to audit reports and total up all Net OPEB Obligations (NOB) to get an estimate of how much Health Benefits for retired public employees will cost taxpayers.  For example, if you were to go to the 2010 Audit Report for the County of Union you would pick off a NOB of $34,612,000.  From that you could even estimate by population to get a national NOB of $80.8 billion {$34,612,000 / 536,000 (UC population) x 313,000,000 (US population) x 4 (levels of go’t)}.

However, in this case you would be wrong because the auditors were very, even comically, wrong and understated the NOB by $106,283,000.  Allow me to explain with a timeline.

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New Jersey has to be bankrupt – but nobody’s telling

New Jersey has to crash and burn first. It’s inconceivable that any other state would be as fiscally dysfunctional. Mix naive government officials with no public or professional oversight and you get double-digit real* property tax increases in perpetuity.

I arrived at this conclusion recently when I learned that New Jersey local governing units need not follow GAAP so all those studies that don’t put New Jersey at the top of the list of bankrupt states are ignoring a very important factor: nobody understands the hole that New Jersey is really in.  For example, take OPEB costs and how Union County is accounting for them.

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