CHICAGO — The Government Finance Officers Association moved closer to issuing a pension disclosure best-practices paper Saturday, when the group’s committee on governmental debt management approved changes to its latest draft.

The debt committee, meeting here before the start of the group’s annual meeting, agreed to alter the document so that it better reflects other types of retirement plans used by municipalities, such as defined-contribution 401(k) plans and deferred-compensation 457 plans.

GFOA’s document will follow a 28-page best-practices paper about pension disclosure released last month by the National Association of Bond Lawyers.

The debt committee members, including Ben Watkins, Florida’s director of bond finance, Frank Hoadley, Wisconsin’s capital finance director, and John Tuohy, deputy treasurer of Arlington County, Va., worked with NABL and other groups in developing the paper.

Committee members praised NABL’s efforts Saturday, but described NABL’s paper as a one-size-fits-all document. They said GFOA is developing its own paper to account for unique situations of the nation’s issuers.

Watkins called pension disclosure a particularly timely topic because the Securities and Exchange Commission has increased scrutiny of issuers’ disclosure. “The SEC has indicated, through enforcement actions, that this is an issue [that is] front and center,” Watkins said. “It’s clear the SEC has taken this issue on.”

In recent years, the SEC has sanctioned municipal bond issuers such as New Jersey and San Diego for not fully disclosing pension information, or for understating pension liabilities in bond documents.

GFOA’s paper, a two-page document still in draft form, calls on issuers to discuss with their bond attorneys the materiality of their pension obligations. It says most governments “will be able to easily include the relevant information that is material to investors.”

The document notes that some governments may need to provide more pension disclosure than others. Those governments should consider reviewing NABL’s best-practices paper, particularly the paper’s Appendix D, it said.

Appendix D provides more thorough disclosure recommendations. It suggests issuers include a “plain language” plan summary and overviews of funding policies, relevant litigation, labor relations, transfers of investment earnings, pension reserves and pension obligation bonds. It also suggests a format for disclosing future projections, should the issuer deem projections necessary.

GFOA’s document suggests issuers create pension disclosure policies and procedures, and includes questions to ask themselves and their attorneys in doing so.

The questions address issues such as revenue sources, the materiality of pension funding to the budget, debt obligations and pension funding trends. Issuers who answer yes to some of the questions may want to consider “more extensive disclosures,” the document says.

Such disclosures could include statements, schedules and statistical tables from annual financial reports, pension information in budgets, copies of laws or legislation, pension investment information, and pension policies and procedures.

The best practices must still be reviewed and approved by GFOA’s debt committee. The document will then be reviewed by the group’s committee on retirement benefits and administration.

Susan Gaffney, director of GFOA’s federal liaison center, said she expects the best practices will be ready for final approval by the group’s board of directors by October.

The debt committee also decided to begin work on an “alert” to issuers that will provide suggestions on managing relationships with raters. The alert, which will appear in the group’s newsletter, will outline some common concerns issuers have with rating agencies, and will encourage issuers to consult with their attorneys and other experts on rating agency matters.

The decision to issue the alert followed a discussion in which committee members expressed frustration that some agencies are increasingly asking issuers to sign contracts releasing them from liabilities.

Some members said raters have even asked issuers to sign contracts after the agency has been paid by the issuer. They also said agencies may rate an issuer even if the issuer refuses to sign an agreement.

Another debt committee member said the free flow of information between issuers and rating agencies has ebbed in recent years, and that rating agency staffers, such as analysts who work directly with the issuers, are frequently rotated out of their jobs. Turnover is high, this person said, and employees at rating agencies are often inexperienced, meaning issuers must spend time “re-educating” new staffers.

Rating agencies have been under greater regulatory scrutiny since the start of the financial crisis. The SEC proposed rules in 2011 aimed at boosting transparency and oversight of the agencies. The rules, which have not been approved, would implement certain provisions of the Dodd-Frank Act.

The GFOA annual meeting, which runs June 10-13, is expected to draw 3,300 attendees, up 15% from last year’s event, said Barb Mollo, director of operations and marketing. Including venders and speakers, attendance could top 6,000.

GFOA press policies require reporters at the conference to receive permission from speakers before attributing comments to those speakers in print. GFOA has said the policy helps ensure members feel comfortable speaking openly among colleagues.

Some sources used in this story declined to be identified.

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