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

State auditor calms local leaders financialreporting worries

ByAmanda Seitz

Staff Writer

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

    The fear is that local governments must nowreport projected employee pension debt on their balance sheets— even though in Ohio they wouldn’tnecessarily be held accountable for paying out those pension monies if thefunds ever dried up.

    Yost, who spoke at Miami UniversityMiddletown to government leaders from around the state, said the new nationalaccounting standards have “unintended consequences” for states like Ohio that don’t have suchstrict pension rules.

    “That’s not really the government’s problemin Ohio, under state law,” Yost said. “If the debt everhas to be repaid, it’s really up in the air who would pay it or if it would bepaid.   There’s no way in Ohio law to enforce thatcurrently against a local government.”

    The new accounting standards, introduced bythe Governmental Accounting Standards Board, come on the heels of financialfall outs from public employee pension statements in other areas of thecountry, such as bankrupt Detroit. Laws in states such asMichigan and Illinois require governments tomake good on their pension promises no matter what, but no such law exists herein Ohio.

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

    Some local officials have been fearful thatreporting what public employees are owed in their pension plans could reflectnegatively on local government credit ratings and their ability to borrowmoney. Earlier this year, Moody’s credit rating agency downgraded Butler County’s bond rating, in partbecause of concerns about the pension obligations.

    “That was supposedly one of the factorsthat 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 ofthe downgrade and new rating standards Thursday.

    The state auditor said he’s met with creditrating agencies, and state officials are also working with major banks to makethem aware of the financial reporting changes and how employee pension debtworks in Ohio.

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

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