WASHINGTON--(BUSINESS WIRE)--Tom Schatz, President of the Council for Citizens Against Government Waste (CCAGW), spoke on Capitol Hill today at a press conference supporting H.R. 6484, the Public Employee Pension Transparency Act. This legislation, introduced by Rep. Devin Nunes (R-Calif.), would require state and local government pension plans to disclose their liabilities to the Secretary of the Treasury and make their financial statements available through a public database.
CAGW has been urging state and local governments to come to grips with their pension funding shortfalls for years. Many state governments have yet to change course, but others have begun to restructure payments. These efforts came partly as a result of the Pew Center’s February 2010 study that estimated a trillion-dollar gap between state pension funds and promised outlays. However, that study likely misjudged the extent of the problem. One study by Josh Barro of the Manhattan Institute, and another by Professors Josh Rauh of Northeastern University and Robert Novy-Marx of the University of Chicago, published in the Fall 2009 Journal of Economic Perspectives, estimated that the Pew report undervalued the chasm between pension funding and liabilities by at least $2 trillion. Local government pension plans are also unfunded by $574 billion.
It may not be too late for reforms that would prevent even the most ominous pension deficits from being transferred to taxpayers at current levels. But before action can be taken, the full extent of the problem must be exposed. The severity of this crisis is difficult to ascertain because of the convoluted, often faulty methods used by state and local governments to determine their liabilities. The Nunes bill would shed some light on the true liabilities by requiring public pension funds to publish clear 20-year projections of expected receipts from employees.
“It is time to remove the fog surrounding state and local government pension plans,” said Schatz. “Rep. Nunes’ legislation is an important step toward transparency and accountability in government. Taxpayers pay all public salaries and they will eventually shoulder this tremendous pension burden. They deserve to know the full extent of their exposure.”
The Council for Citizens Against Government Waste (CCAGW) is the lobbying arm of Citizens Against Government Waste, the nation’s largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.