As announced in the NACo Legislative Bulletin, Moody’s Investors Service (“Moody’s”) is requesting comment from interested parties on its plan to implement several adjustments to pension liability, asset, and cost information reported by state and local governments and their pension plans. Comments are due by September 30.
From the Legislative Bulletin:
In addition to using a uniform 5.5 percent discount rate for all plans, Moody’s intends to apply a single, 17-year amortization period to annual pension contributions, and replace asset smoothing with the market value of assets as of the actuarial reporting date.
GASB, as the independent standard setter of generally accepted accounting principles for state and local governments, has already taken action in this area. Accordingly, it is very important that elected officials involved with the obtaining of credit ratings for municipal bonds make their concerns known to Moody’s in as direct a manner as is possible. Given that Moody’s has indicated that its proposed changes could have an impact on ratings for local governments “where the adjusted liability is outsized for the rating category and without mitigating factors such as demonstrated flexibility to respond to higher fixed costs,” it is particularly important that local officials make their voices heard.