How Will Unfunded Pension Liabilities Affect Big Cities?


This brief examines GASB 68 and how unfunded liabilities will be reported for large cities that participate in cost-sharing state plans. (01/16)

Alicia H. Munnell, Jean-Pierre Aubry
Publication date:
January 2016
Filed under:
Research Studies
Key findings:
  • When the unfunded liability is reallocated from the state to the 92 cities in cost-sharing plans, the liability burden almost doubles.
  • While this is not a new liability, it is raising concerns for cities in these cost-sharing plans because the liability had previously been reported as an aggregate figure in the state government’s financial statements.
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Beginning in 2015, under new provisions of the Governmental Accounting Standards Board (GASB), the unfunded actuarial liability for public pension plans moved from the footnotes of financial statements to the balance sheets of employers. In addition, localities that participate in multi-employer state plans are now required to report their share of that plan’s liability on their books.