Earlier this month, the language of the pension and labor debates became a bit clearer, as the Institute for Local Government published its Guides to Pension and Labor Terminology. The two resources seek to disambiguate the language that surrounds the ongoing conversation of pensions and labor.

Despite all the public uproar that continues to consume much of public discourse, most of the terminology remains foreign to the masses.

Their guide offers assistance local officials as they engage in conversations with their constituents, their bargaining representatives and each other about public pension issues. Because labor relations issues factor so heavily into these conversations, the ILG released both guides simultaneously

Their guides to terminology provide plain-language definitions to some of the most complicated concepts.

Take for example the ILG’s definition of Unfunded Liability:

Unfunded Liability.  This exists when the value of benefits estimated to be payable to plan members as a result of their service exceeds the projected value of plan assets available to pay those benefits.  This phenomenon is sometimes referred to as “unfunded actuarial accrued liability” (sometimes referred to by the acronym UAAL).  This amount changes over time as a result of changes in benefits, pay levels, rates of return on investments, changes in other actuarial assumptions, and changes in the demographics of the employee base.

Public entities typically reduce an unfunded pension liability over time as part of their annual employer contribution. Under standards set by the Governmental Accounting Standards Board (GASB), unfunded liabilities should be addressed over a period of not more than 30 years in order to provide reasonable assurance of the payment of future benefits. 
Related concepts: actuary (actuarial assumptions), fully funded, funded ratio, funding policy, normal cost, pension obligation bonds, present value of projected benefits, and under-funded.

What can be noted as exceedingly helpful is the list of related terms, which can help build not only the pension and labor vocabulary, but its comprehension as well.

Both are available on the Institute for Local Government’s website at:

These resources are part of the Institute’s “Local Government 101” program, designed to put core concepts in local government into plain language for local officials, the media and the community. For more about this program, please visit www.ca-ilg.org/localgovt101.
ILG welcomes your thoughts and suggestions on these resources. Please send them to jspeers@ca-ilg.org or fax them to 916.444.7535.