Moody's Evaluation of Municipal Pensions Are a Poor Way to Assess Their Health

The NYT told readers about efforts to require city governments to disclose their pension liabilities in order to be able to continue to issue tax-exempt bonds. While better disclosure of pension liabilities may be desirable, there are important methodological issues that the piece neglects to mention.

The piece notes that Moody's, the bond-rating agency, is now adjusting pension liabilities reported by city governments in making assessments of their financial situation. The methodology used ...