State and local governments have finally started to include significant retirement benefit obligations among the liabilities reported on their balance sheet, following the implementation of new accounting standards.
For example, in California’s latest CAFR (comprehensive annual financial report), the state reports a $74.5 billion “net pension liability” (including component units), after reporting a $10.9 billion “net pension obligation” last year.
So why does Truth in Accounting say that California still has $4.4 billion in “hidden pension debt?” (See this.)
The new accounting standard allows states (and cities) to use year-earlier actuarial valuations, even if new ones are available at the time the CAFR is released.
If a state (or city) chooses to do this, and the new (but unused) valuation report shows higher pension debt, we include that higher debt, and call it “hidden.”