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Budget & Finance

GFOA Urges Moody's to Refrain from Making Pension Changes

The Government Finance Officers Association is urging Moody's Investors Service to refrain from moving forward with its proposal to change its analysis of public-sector pension data and recalculate the pension liabilities of state and local governments.

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Comments (1)
The GFOA is confusing Moody's with the GASB. Their roles are different. The GASB provides broad guidelines on how municipal entities should present their financial statements. A certain amount of flexibility, such as the discount rate used in calculating pension obligations, makes sense for the GASB. Moody's goal is to assess credit risk which means they should use the same approach and analytic tools and measurements for all similar municipal entities. The fact that their analysis of pension obligations would be different than the accounting value is nothing unusual and happens all the time in credit analysis. Without such a uniform approach, how is Moody's suppose to make insightful conclusions as to unfunded pension obligations or comparisons between municipals on their respective pension burden?
Posted by mdwjr | Monday, September 17 2012 at 4:08PM ET
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