From the Chairman's Desk
By David A. Vaudt, GASB Chairman
User Resources Coming for Understanding Benefits of Changes to Pension Standards
The new pension standards for state and local governments, once fully implemented, will usher in some significant enhancements to the information that state and local governments report about the pensions they provide. The standards will lead to greater transparency, consistency, and comparability of the reported information and to a clearer and more complete picture of the government’s related commitments.
Looking ahead, anyone willing to take the time to read the government’s financial statements will have access to comprehensive information about what has been promised to current and retired employees and how much those promises cost. They will also be able to assess whether progress is being made toward fulfilling those promises.
I want to share some thoughts with you about what we are doing to help financial statement users get their arms around the changes that are coming.I want to share some thoughts with you about what we are doing to help financial statement users get their arms around the changes that are coming and to assist governments with communicating about the new information they will be reporting, so that the transition to understanding and taking advantage of information that results from the new standards is as smooth as possible.
Communication Is Key
Pension plan financial reports following the requirements of GASB Statement No. 67, Financial Reporting for Pension Plans, will begin to become available in the coming months. On the government employer side, GASB Statement No. 68, Accounting and Financial Reporting for Pensions, applies to fiscal years ending June 2015 and later, and the reports reflecting the new numbers and disclosures will follow in the months afterward.
Many stakeholders are eagerly anticipating the public availability of those financial reports to get a glimpse of what the numbers will look like. I suspect that there will be a significant learning curve for financial statement users seeking to understand the meaning of all of the changes in store for state and local governments that prepare financial statements according to GASB standards. The key to understanding those changes will be communication.
Pension Communication Resources Group
To promote a better understanding between governments and their constituents about what the changes mean, we have assembled a Pension Communication Resource Group.
To promote a better understanding between governments and their constituents about what the changes mean, we have assembled a Pension Communication Resource Group that brings together a cross section of our key stakeholder organizations. The group is in the process of reviewing materials that stakeholder groups have published about the new pension standards. The objective is to identify communications that are particularly good at conveying what the new pension standards are all about and what the public can expect to see governments reporting in the future. The group will be expanded in early 2015 to include the expertise of a broad range of stakeholder groups.
The group is looking to build upon existing educational resources, in order to assemble a core set of materials that speak to the major issues related to the pension standards. Stakeholder organizations would then be able to use these materials as the basis for sharing information with their members as appropriate. The idea is to better equip state and local governments with meaningful and understandable answers to the questions they are likely to receive from their elected officials, citizens, municipal bond analysts, or the news media.
The changes that are coming will have a significant impact on the information available about promises that have been made to employees, how much those promises will cost, and whether governments are gaining or losing ground on fulfilling them.The bottom line is that the changes that are coming will have a significant impact on the information available about promises that have been made to employees, how much those promises will cost, and whether governments are gaining or losing ground on fulfilling those promises. Our Pension Communication Resource Group can provide a roadmap and resources for the benefit of government officials in speaking with their constituents.
As always, if you have ideas or suggestions you’d like to share with us, we’d be grateful to hear from you.
David A. Vaudt