In 2012 an accounting rule was implemented by the Governmental Accounting Standards Board. The board told local and state municipalities
they would have to use business accounting standards to their pension calculations. These standards are set to kick in 2016.
Here is more from NewsOK.com:
Each year, government officials calculate an annual required contribution, a payment that is supposed to fund benefits accruing to employees that year while also paying off unfunded liabilities. But the higher the assumed return on investment, the smaller the size of the contribution required.
Biggs found government pensions currently assume 7.7 percent returns on average. Also, corporate pensions generally pay off unfunded liabilities over a period of seven years. In comparison, most government pension plans amortize unfunded liabilities over 25 years — and in some cases as much as 100 years.
In Oklahoma, these new rules were applied to the pension system. Here’s what they found:
Oklahoma Public Employees Retirement System, the actuarial funded ratio is 89 percent. But when Biggs applies fair-market values, that figure falls to 66 percent funded status. Likewise, the Oklahoma Police Pension and Retirement System’s funded status falls from 95 percent to 68 percent. Most ominous of all, the Oklahoma Teachers Retirement System’s funded status falls from an already bad 63 percent to just 46 percent funded.