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Pension crisis accounting rule comments rigged by gluttons at the public trough

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Photo: Emily Metcalf

BY FRANK J. KEEGANWell Pilgrims, when we sit down to feast this Thanksgiving Day pray for God to suppress the insatiable appetite of governments, because their fiscal gluttony now surely will inflict future disease on us all.

Right now fiscal gluttons at the public trough not only gorge at the expense of future taxpayers and public workers who shall be left destitute, they fight any efforts to expose their lies about devouring America’s economy.
Think not? Then look at comments opposing Government Accounting Standards Board proposed rules for a tiny bit of honesty about municipal and state pensions.
Sheila Weinberg, founder of The Institute for Truth in Accounting, studied all 659 comments on rule changes that will affect whether politicians finally have to admit at least in small part the magnitude of our municipal and state pension crisis.
She said Tuesday, “95 percent of the comments came from people who have a direct vested interest in governments concealing the true costs.”
She expanded on her blog that those 626 comments “came from state and local governments, retirement systems, their employees, their affiliated organizations and consultants that do business with public pensions such as pension actuaries, accountants, auditors and the like.”
Worse, Weinberg said, “More than 50 percent of the comment letters seem to be form letters of a campaign orchestrated by one or more of these groups.”
Only three comments were from individual citizens. (Full disclosure: I submitted a column.)
According to Weinberg, 515 comments were from “Current or former government employee(s) or elected officials.”
Forty-nine were from “Government associations,” 40 from “Retirement plan employees or officials,” 14 from “Actuaries or employees of actuarial firms” and eight from “CPAs that do governmental auditing or consulting.”
These are the people with a desperate vested interest in continuing the lie about public pensions. They make fortunes from that lie, and the longer they can delay the inevitable day of reckoning the bigger fortunes they can make before bugging out to dump the catastrophe on successors.
That lie is huge and will bankrupt at least two generations of Americans. GASB allows accounting tricks and deceptions that would land any individual or private company executive behind bars.
Bernie Madoff’s bookkeeping was honor-scout compared to the fraud state and local politicians use to hide their pillaging of the present at the expense of our future.
A small but growing number of worried citizens, investors, bond lawyers and even politicians are begging GASB to require at least a minimal level of honesty in state and municipal accounting.
Beneficiaries of the big lie are fighting that with the strength and desperation of sumo wrestlers at a smorgasbord.
Among the few voices of reason with experience on both sides of the table is Diann Shipione, now a financial executive who seven years ago endured threat of arrest from fellow trustees of the San Diego pension board.
Her crime? Raising legitimate questions about deceptive pension accounting.
Her 12-page comment letter indicts current and proposed rules. She explains exactly why America desperately needs honest accounting standards.
Shipione writes GASB “…appears intent on providing accounting and reporting techniques that will accommodate continued pension debt deferral practices …” allowing politicians to continue to “defer corresponding debt into the future ….
“GASB has moved almost entirely toward the interests of its more powerful and financially influential constituents, namely state and local governments, and the parallel interests of their politically influential employees.”
She sums up the heart of the crisis succinctly:
“These constituencies have expressed an appetite for more opaque standards which result in an informational asymmetry that:
  • "Prevents clear recognition of annual and future pension costs,
  • "Impairs comparison of costs between generations and between governments, and,
  • "Allows for the transfer of costs from current employees to future generations of employees and taxpayers.”
Because it is fed entirely by voluntary donations from those it sets nonbinding standards for, GASB has no real power to control their appetite.
Worse, Shipione points out that, “Currently, six of the seven GASB board members are, or have been, employed by a government,” including “state and municipal government entities (that) find great relief in reporting systems which accommodate fuzzy methodologies that accrue, hide and defer floating debt.
“Unfortunately, the proposed amendments” she writes about these modest rule changes pension insiders oppose even though they leave enough holes to sink a ship of state, “fail to provide citizens the cost information related to their collective community interests ….”
But taxpayers are not the only constituency politicians and their pension henchmen betray.
“It is equally puzzling why state and local governments, and employee pension systems, work so hard, so consistently and pay so much money to consultants to advocate for accounting, reporting and actuarial schemes to DECREASE pension contributions?”
No, it is not puzzling at all. They gorge now to give a fiscal heart attack to future generations of taxpayers and public workers.
Even though the public comment period officially is closed, every taxpayer, public employee, business group and charity now burdened forever by the service cuts and tax increases deceptive pension accounting inflicts must send GASB a simple message: Be honest!
If we do not force those who govern us to account honestly, we soon will be calling this holiday "Thankstaking."
Frank J. Keegan is a national editor for The Franklin Center for Government and Public Integrity, watchdog.org and statehousenewsonline.com . Any disgusted public employee, journalist, activist organization or citizen watchdog who wants help exposing government waste, fraud and abuse may contact him at: frank.keegan@franklincenterhq.org
For a comprehensive primer on state and municipal government pensions, check Statebudgetsolutions.org and sunshinereview.org . And for an aggregation of news from around the country, check Pensiontsunami.com .

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