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STATE AUDITOR

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Vivian Moon View Drop Down
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    Posted: Jun 05 2014 at 5:27pm

Posted: 4:08 p.m. Thursday, June 5, 2014

State auditor calms local leaders financial reporting worries

By Amanda Seitz

Staff Writer

    MIDDLETOWN Ohio Auditor David Yost spoke to more than 100 local government leaders Thursday to address their worries about new financial reporting standards that will be implemented nationwide in the next year.

    The fear is that local governments must now report projected employee pension debt on their balance sheets— even though in Ohio they wouldn’t necessarily be held accountable for paying out those pension monies if the funds ever dried up.

    Yost, who spoke at Miami University Middletown to government leaders from around the state, said the new national accounting standards have “unintended consequences” for states like Ohio that don’t have such strict pension rules.

    “That’s not really the government’s problem in Ohio, under state law,” Yost said. “If the debt ever has to be repaid, it’s really up in the air who would pay it or if it would be paid.   There’s no way in Ohio law to enforce that currently against a local government.”

    The new accounting standards, introduced by the Governmental Accounting Standards Board, come on the heels of financial fall outs from public employee pension statements in other areas of the country, such as bankrupt Detroit. Laws in states such as Michigan and Illinois require governments to make good on their pension promises no matter what, but no such law exists here in Ohio.

    In Ohio, taxpayers contribute between 14 and 18 percent of an employee’s salary to a pension fund. Employees match those contributions by between 10 percent and 14 percent of their salary.

    Some local officials have been fearful that reporting what public employees are owed in their pension plans could reflect negatively on local government credit ratings and their ability to borrow money. Earlier this year, Moody’s credit rating agency downgraded Butler County’s bond rating, in part because of concerns about the pension obligations.

    “That was supposedly one of the factors that affected our bond rating, even though we had no control over it at all, we’re not responsible for that,” Butler County Commissioner T.C. Rogers said of the downgrade and new rating standards Thursday.

    The state auditor said he’s met with credit rating agencies, and state officials are also working with major banks to make them aware of the financial reporting changes and how employee pension debt works in Ohio.

    “I understand from Moody’s that most of the reviews have not resulted in a downgrade at this point,” Yost said.

    Yost said the full implementation of the new accounting standards will be implemented within the next year.

 

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