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.