ALEXANDRIA—What is the greatest fiscal dilemma facing the commonwealth?
To the state’s newly appointed top auditor, the answer is clear.
“The biggest thing in the next few years is definitely pensions and the pension debt,” Martha Mavredes, Virginia’s auditor of public accounts, told Watchdog.org in an interview this week.
As the state’s top financial watchdog, Mavredes oversees the financial statements and audits for all the commonwealth’s executive and judicial agencies — including the Virginia Retirement System. Right now, the state body that handles public employee pensions reports that its main retirement plan is just 70 percent funded with an unfunded liability, or debt, of roughly $24 billion — and that’s a very conservative estimate, critics say.
But the picture is about to get bleaker for cities when new accounting rules set by the Governmental Accounting Standards Board or GASB, start requiring localities to put their exact amount of teacher pension debt they carry on their own financial books, Mavredes said. And that could seriously lower county and city credit ratings, undercutting their ability to borrow money.
“The concern that they have is now the new standards require us to take that teacher liability and to allocate it out to the localities,” Mavredes said. “And you’re talking some very big numbers for some of the localities. These are numbers that the rating agencies didn’t have for the localities in the past. They didn’t have any idea of what that number would be. So, the localities are very concerned about, what’s their impact going to be?”
Statewide, localities are carrying about $15 billion in teacher pension debt as of June 30, 2012, Mavredes said. And that figure breaks out into some pretty ugly ones for cities and counties. Fairfax County Public Schools carries the biggest chunk of teacher pension debt at roughly $2.6 billion, followed by Prince William County Public Schools at $967 million.
“That’s a big number to roll into your statements,” Mavredes said.
Mavredes, who takes the place of retired auditor Walter Kucharski, first came to the APA office in 1984. Before assuming her new role, she served as the state’s deputy auditor.
— Kathryn Watson
Here are a couple more questions from Watchdog Virginia’s interview with Mavredes:
WD: What is the purpose and mission of the APA office?
Mavredes: “To me, the most important thing we do is look to ensure that when the General Assembly passes the appropriation act and says here is how the money is to be spent, well then when we go to these agencies, we want to be sure that they’re following the intent of the General Assembly. Because we’re kind of the only way to know that.”
WD: What is one thing the auditor’s office does that most people don’t know?
Mavredes: The auditor’s office is charged with running the Commonwealth Data Point, essentially the state’s “checkbook,” Mavredes said. “It’s a lot of good information that’s available for analysis, and just gives people kind of an idea of what’s going on in state government,” she added.