A new study finds that current Government Accounting Standards Board (GASB) rules used by state and local governments to estimate pension plan funding significantly underestimate costs, and, as a result, potentially encourages excessive hiring at the local level. The study was written by the University of Rochester’s Robert Novy-Marx and Northwestern University’s Professor Joshua D. Rauh.

“A significant finding of our analysis is that the GASB rules significantly undervalues the
cost of providing DB (i.e. pension) plans to state workers,” noted Novy-Marx and Rauh in the report. Keep reading →