GASB 68 Cheat Sheet for Chair Gallogly and Pension commission

             Apparently the  RI Pension Study Commission and its Chair don't know how to calculate and apply GASB 68 to the "crisis towns" in Rhode Island directly under their watch. After spending a year with the town of West Warwick  crafting a Funding Improvement Plan (their second one..first failed) and close to a year of  persistently warning commission members that GASB 68, after long last, was going into effect MS Gallogly decided to defraud local voters and outside municipal investors regarding the status of the pension plan and the overall financial health of West Warwick.
            Instead of calculating GASB 68 and using that rate in her 5 year plan she chose instead to use the local actuary guess of 7.5%. So , maybe the problem is that she or the  specific town finance director/treasurer  or their actuary don't know how to calculate GASB 68. To help them , we provide all the info below and 3 separate examples that include two of the RI towns that are on the Crisis Commission  Mayor Taveras and Mayor Polisena. The Municipal bond chart also.

How to Calculate your Towns appropriate discount Rate GASB 68

(funded ratio * Hired gun discount rate) + ( unfunded ratio * 20 year AA muni bond rate)

Example 1 West Warwick,RI     

 (17 % funded * 7.5%) + (83% unfunded * 3.4%) = 4.07% (that adds $90 million in liabilities)

Example 2   Johnston , RI

 ( 26% FUNDED * 7.75%) + ( 74% unfunded * 3.4%) = 4.53% 

 Adjusting Johnston to GASB 68 increases unfunded liability by $ 84,000,000 or nearly double.

Example 3  Providence Rhode Island

   ( 30% funded *8.25% ) + (70% unfunded * 3.4%) = 4.85%

Adjusting Providence to GASB  68 and subtracting $60 million from assets for accounting lie produces an unfunded liability of $ 1.813 billion . $ 1 billion more than is currently reported.