With new accounting rules that are scheduled to go into effect July of 2014, the city of Hopkinsville, on paper, would show as being broke, even though nothing would have really changed financially.
According to an article in the Courier-Journal, even though the city of Hopkinsville has an estimated 27-million dollars in assets, a seven million dollar cash reserve, and a AA credit rating, the new rules, which require local governments, public agencies and other public employers that pay into the state retirement system, to reflect their portion of Kentucky's massive pension debt on their financial documents, would show the city as being broke due to the city's 36-million dollar pension debt.
The newly reflected debt does not change the actual pension obligations, however, the sudden increase in liabilities, on paper, could cause such a significant shift on balance sheets, that it could affect credit ratings and loan agreements.
According to an article in the Courier-Journal, even though the city of Hopkinsville has an estimated 27-million dollars in assets, a seven million dollar cash reserve, and a AA credit rating, the new rules, which require local governments, public agencies and other public employers that pay into the state retirement system, to reflect their portion of Kentucky's massive pension debt on their financial documents, would show the city as being broke due to the city's 36-million dollar pension debt.
The newly reflected debt does not change the actual pension obligations, however, the sudden increase in liabilities, on paper, could cause such a significant shift on balance sheets, that it could affect credit ratings and loan agreements.
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