How many Illinois taxpayers want to stick around to see if GASB is right?

FORBES: Want To Make That Public Pension Look Healthier? Burn The Cash

GASB, is for the new rules to make the cost of retiree-health obligations clearer and thus keep governments from making over-generous promises.

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For analysts like Rauh, the main culprit is the governmental accounting standards board (GASB), whose discounting metrics are a point of contention for economists.

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The Government Accounting Standards Board (GASB) will decide on June 25th whether to impose new rules that would require states to use a more realistic rate.

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The state also uses a liability estimation method (the Projected Unit Credit method) that modestly understates accrued pension benefits, and amortizes its unfunded pension liabilities over a period slightly longer than the 30 years recommended by GASB.

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Novy-Marx concludes with a thought experiment where he substitutes GASB accounting with an identical system where future liabilities are discounted at the muni rate (after all, the risk of non-payment to pensioners is no different, or in most case lower, than the risk to bondholders).

FORBES: Want To Make That Public Pension Look Healthier? Burn The Cash