Local officials say that new requirements for the way governments report pension contributions will have little or no impact on the way they do business.
“We are not worried about it,” said Stokes County Finance Director Julia Edwards. “It will not impact our borrowing of monies.”
In fact it will not even create much new work for the county finance department.
“The state handles our pension plan and they will be giving us the figures to use in our audit,” Edwards said. “The Local Government Commission will provide an example of how we need to change the notes, so we will be able to just look at that and copy and paste and drop in the numbers.”
King Finance Director Susan O’Brien agreed.
“Basically this is just a reporting requirement,” she said.
Officials in North Carolina seem to feel the changes will result in little more than paper-shuffling and bean counting.
In North Carolina, the state funds four state-wide pension plans in which local government employees and public authorities participate. They include the Teachers and State Employees Retirement System, the Local Government Employees Retirement System, the Firefighters and Rescue Squad Workers’ Pension Fund, and the Register of Deeds Supplemental Pension Plan.
Under the new reporting system, the state will determine any shortfalls in the pension plans, assess each localities’ shortfall and report the shortfall to local governments at the end of fiscal year 2014-2015. The local government will then be required to show any liability on its end-of-year financial statement.
According to Sharon Edmundson, director of the fiscal management section of the Department of the State Treasurer, the changes are simply a matter of how any end-of-year liability is reported.
“It is important to note that implementation of the new standards will not require that North Carolina local governments and public authorities change the way it is funding its pension plans, nor will it create any new obligations for those plans,” Edmundson wrote in a February memo to local governments. “These standards are accounting and reporting standards. They will change the way pensions are reported but do not dictate any changes in the way the pensions are funded.”
In fact, Edmundson said, the standards are the result of an intention to separate the funding process from the accounting and reporting process.
“Before the implementation of these standards, participant governments were not really recording and reporting the liabilities associated with their pensions,” she wrote.
Edmundson said the net result for North Carolina localities will be the need to answer questions from rating agencies when trying to issue debt.