ANCHORAGE — Early next year, New Hampshire Treasurer Catherine Provencher will embark on a "road show" for several months throughout the Granite State to educate local finance directors and elected officials about new disclosure and methodology changes to pension liabilities approved by the Governmental Accounting Standards Board in June.
Provencher will be joined by the chief financial officer of the state's pension fund and a liaison from the council on local governments, she told The Bond Buyer in an interview here at the National Association of State Treasurers annual conference.
Provencher believes it is the responsibility of all treasurers to educate elected officials and finance directors about the accounting changes, which will go into full effect in 2015.
"I think the states understand," she said. "I don't know that the municipalities understand. We will reach out to folks and go to any municipality who wants to hear from us directly."
GASB's new accounting standards, designed to improve states' financial reporting for public pension plans, would increase the total unfunded liabilities reported by many governments, especially for those that already have funding problems.
Total unfunded U.S. pension liabilities are estimated to be more than $2 trillion, Moody's Investors Service found in a recent report.
Currently, governments disclose pension information in the footnotes to their financial statements and only report the contributions they are required to make in a given year, as well as what they actually paid.
The new accounting rules, however, would require governments to disclose a "net pension liability" figure for the first time on their balance sheets in addition to funding projections.
Other states have been contemplating some form of educating their local officials about the accounting changes but haven't come to a uniform decision on how to approach it.
Utah Treasurer Richard Ellis said his state's pension staff is talking with the local chapter of the Government Finance Officers Association and other local finance groups to help them understand "our fear, which is that most of them don't have any clue that they will have to recognize something new on their balance sheets."
"They are starting that process and preparing trainings so that by next year they will be prepared to go out and do that," Ellis said during the NAST roundtable discussion of the most pressing issues facing states.
"An education process, sort of a forewarning, would be a great thing to do," said Alabama Treasurer Young Boozer. "This is the aftershock after the earthquake, but the aftershock is probably going to be a bigger impact."
Provencher is NAST's representative on the governmental accounting standards advisory council, which advises GASB. She plans to reach out to the GASB on behalf of NAST to request that the group receive some base-level educational material so that treasurers have an outline to start with that they can tailor to accommodate their own pension plans.
"Let's face it, we are all going to have different information that needs to be presented to our local governments, but at a high level it should be similar information," Provencher said.
She envisions that the educational material each state would receive would be available for local officials on the state's department of revenue website as well as the state's pension fund website.
For New Hampshire, she hopes that her road show team will be able to find a municipality that is active in financial reporting to volunteer and serve as an example of how implementation of the GASB rules would work.
If they have a town to use as an example in their educational presentations, it will help local officials "get their head around what it will look like," she said.
New Hampshire has always reported the entire pension liability in its financial statement footnotes, which amounts to about 25% of the state's share. Now, 75% of that liability is "going to be sliced and diced" among the 284 towns in the state, Provencher said.
For towns that have never had to show any pension liability in their financial statements, "they might not even have an idea of how much it is," she said.
GASB is assisting local and state governments by educating finance directors and elected officials through conducting regular liaison meetings with professional organizations, board spokesman John Pappas confirmed.
Most of the discussions surrounding pension statements are featured prominently in many of the presentations the GASB staff present at constituent conferences, he said.
The board is working on creating two implementation guides, one for each statement that was approved in June. They are also creating a series of question-and-answer fact sheets and a series of podcasts that address various aspects of the changes.
GASB also is tentatively planning a webcast to address early implementation and interpretation of accounting issues, Pappas said.