The New York Times has an interesting piece this morning about proposed pension-disclosure rules for states and cities:

Government officials have granted pensions to teachers, police, judges, and other public workers for years without reflecting the true cost, analysts say. Now the bills are coming due, and in many cases there is not enough money set aside, adding to the fiscal distress across the country.

Corporations are required to measure their pension obligations at fair value when they report their numbers to the Securities and Exchange Commission. But not state and local governments. That’s because they have no desire to be transparent about how in the red their pension systems are. Looking at the state of New Jersey, Eileen Norcross of the Mercatus Center and Andrew Biggs of the American Enterprise Institute have put out a new recent study saying that if the state’s pension system disclosed its pension numbers at fair value, it would have a shortfall of $170 billion, instead of its reported $46 billion. That’s the equivalent to 44 percent of gross state product (GSP) and 328 percent of the state’s explicit government debt. Norcross and Biggs show that depending on market conditions, the state will begin to run out of money to pay benefits between 2013 and 2019. The state’s five defined plans cover over 770,000 workers, and more than a quarter million retirees depend on state pensions paying out almost $6 billion per year in benefits. It seems like a crisis that should be addressed sooner rather than later. But according to the New York Times, the Governmental Accounting Standards Board’s new proposal won’t ask the states to value their pensions at fair value. You can read more here. The Norcross and Biggs piece is here. Brace yourself — it’s depressing.