(Bloomberg) -- U.S. state and local governments will have to report billions of dollars in health care liabilities on their balance sheets under an accounting change aimed at improving disclosure of retiree benefits.
As a result of rules approved Tuesday by the Governmental Accounting Standards Board, municipalities and states will have to record the cost of health insurance and other benefits besides pensions in financial statements, the board said in a statement. Such costs are currently disclosed only in footnotes.
READ: Even strongest states keep kicking pension can
The change is part of a push by the accounting-standards setter to improve how governments report the cost of worker benefits that they haven’t set aside enough money to pay. Similar requirements started taking effect for pensions last year.
States alone have $529.8 billion of unfunded liabilities for health care and other benefits besides retirement checks, according to November 2014 report by Standard & Poor’s, the New York-based bond rating company.
READ: Public pension picture darkened by few states
The shift that was approved unanimously will “significantly improve” disclosure of the promised benefits, the board said.
Reporting the liability promises to “represent a very significant liability for many state and local governments,” said David Vaudt, chairman of the board, in the release. “It is critical that taxpayers, policy makers, bond analysts and others are equipped with enhanced information.”
The rule is set to take effect for the years starting after June 15, 2016.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
