TY - JOUR
T1 - Impact of unfunded pension obligations on credit quality of state governments
AU - Martell, Christine R.
AU - Kioko, Sharon N.
AU - Moldogaziev, Tima
PY - 2013/9
Y1 - 2013/9
N2 - This study reviews the funding status of state-administered pension plans and their impact on state credit quality. As the fund ratio (actuarial assets/actuarial accrued liability) of state-administered pension plans decreases, states are more likely assigned a lower rating. Moreover, rating outlooks are sensitive to the fund ratio, especially for migration between stable and negative outlooks for states with lower fund ratios. These results are a timely pretest to the 2013/2014 implementation of GASB Statements No. 67 and 68, serving as a benchmark to assess whether new reporting requirements will yield information to alter the market's response to unfunded pension liabilities.
AB - This study reviews the funding status of state-administered pension plans and their impact on state credit quality. As the fund ratio (actuarial assets/actuarial accrued liability) of state-administered pension plans decreases, states are more likely assigned a lower rating. Moreover, rating outlooks are sensitive to the fund ratio, especially for migration between stable and negative outlooks for states with lower fund ratios. These results are a timely pretest to the 2013/2014 implementation of GASB Statements No. 67 and 68, serving as a benchmark to assess whether new reporting requirements will yield information to alter the market's response to unfunded pension liabilities.
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U2 - 10.1111/j.1540-5850.2013.12013.x
DO - 10.1111/j.1540-5850.2013.12013.x
M3 - Article
AN - SCOPUS:84883621990
SN - 0275-1100
VL - 33
SP - 24
EP - 54
JO - Public Budgeting and Finance
JF - Public Budgeting and Finance
IS - 3
ER -