Moody’s Issues Update on Status of State and Local Government Pension Data AdjustmentsIn April 2013, Moody’s expects to finalize its approach to making adjustments to the pension data reported by U.S. state and local governments for use in its rating process. Moody’s notes in this special comment update that “its final approach will be formally incorporated as part of its GO bond rating methodologies for state governments and local governments in the US next month, at which time it will also identify any ratings potentially affected by the new approach.”
The GFOA submitted comments to Moody’s in September 2012 opposing its proposed adjustments to the pension data reported by states and localities, arguing that the proposed adjustments: fail to recognize differences in actuarial assumptions concerning the accrual of the liability, could be arbitrary; could add volatility to the calculation of the pension liability, and could set a precedent for making similar adjustments to other state and local government liabilities.
A copy of the GFOA comments can be found here. A copy of the Moody’s Updated Special Comment can be found here.
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