When the Government Accounting Standards Board changes how pension assets and debt are calculated, the picture of public pension funds might become a bit gloomier.

Among the changes that are in the works is a change in how pension funds defer market losses over a number of years. For example, CalPERS, the nation’s largest pension fund, has yet to fully account for losses suffered in the Great Recession, and they may not have for another 10 to 15 years.

But the change could do more than simply change how debt and funding liabilities are reported; it could change how public debt and credit ratings are calculated.

From the Contra Costa Times:

THE HUNDREDS of billions of dollars of publicly reported pension debt in California will increase significantly under proposed new national accounting rules that could make it more difficult and costly for state and local government to borrow money.

As those governments consistently fail to properly fund public-employee pension systems across the country, the obscure, but influential, Governmental Accounting Standards Board has been examining how public agencies should disclose the shortfalls on their financial statements.

Pension critics in California are touting the much-anticipated rules as a game-changer in the debate over whether to continue taxpayer-funded plans. That overstates the likely effect. But the new rules should raise awareness about the alarming growing debt and could put greater pressure on pension boards and elected officials to more honestly address the problem.

Read the full article here.