The Public Employee Pension Transparency Act (H.R. 6484) was introduced last week by Congressmen Devin Nunes (R-California), Paul Ryan (R-Wisconsin), and Darrell Issa (R-California).
“As we speak, lucrative pension promises are being made to public employees that taxpayers simply cannot afford. The plans themselves admit to more than a $1 trillion in unfunded liabilities,” said Congressman Nunes, in announcing the bill’s introduction. “Unfortunately, the true level of unfunded liabilities associated with these plans – perhaps more than $3 trillion – is being hidden thanks to unrealistic accounting standards.”
According to an explanation posted on Congressman Nunes’ web site, the Public Employee Pension Transparency Act would:
- Require that state and local pension plans report two sets of information to the Secretary of the Treasury which will be made available on the internet for public review; one that will detail current public pension liabilities based on existing accounting methods, as well as the methods and assumptions used in that set of numbers, as well as a second set of numbers that would detail the current pension liabilities “but will do so using uniform guidelines,” including what the bill’s authors termed “more realistic discount rates, as well as controls to assure assets are counted using a reasonable estimate of fair market value”.
- Deny the ability to issue federally tax-exempt bonds to any state or local government that refuses to report their public pension liabilities.
Congressman Paul Ryan, incoming Budget Committee Chairman, offered the following statement regarding the Public Employee Pension Transparency Act: “We need to ensure that state and local governments are accurate and honest in detailing their financial liabilities, including the cost of pension plans for public employees. The Public Employee Pension Transparency Act will make government more accountable to taxpayers by shining a light on the financial soundness and unfunded obligations associated with these plans and I’m honored to join Representatives Nunes and Issa in sponsoring this common sense legislation.”
Additionally, the bill’s authors noted that “state and local government leaders and employee unions are already talking about the possibility of a federal bailout of their pension programs,” going on to note that “Congress must preempt this effort by making a clear policy statement that the American taxpayer will not bailout state and local governments that have recklessly promised unaffordable benefits to their workers”.
Congressman Darrell Issa, Incoming Chairman of the Oversight and Government Reform Committee said: “The American people have a right to know the truth about the unfunded liabilities being run-up by state and local pensions. Quite frankly, if they have nothing to hide, there’s no reason why the states and local governments who control public employee pensions should not embrace this effort to ensure that the taxpayers have a more transparent accounting of the true nature of pension liabilities.”
Lending its support to the measure was the U.S. Chamber of Commerce. “The unfunded liabilities of state and local government pension plans has reached crisis proportions with no solution in sight,” said Randel K. Johnson, senior vice president of Labor, Immigration, and Employee Benefits for the U.S. Chamber. “Unfortunately, the one solution governments may turn to as a source of funding is further taxation on private sector employers and workers. Further, it is hardly fair that the private sector is held to stringent funding requirements under the Employee Retirement Income Security Act, which can adversely affect wages and benefits for workers as funding shortages are addressed, while the public sector often remains free to promise increasing levels of benefits without properly funding those benefits for the future.” In a press release, Johnson went on to note that “This legislation will at least require that we have an accurate accounting of the degree of underfunding so that meaningful solutions can be explored, whether at the state or local levels.”
The bill is available at http://nunes.house.gov/_files/NUNES_068_xml.pdf
An informational brochure is available at http://www.nunes.house.gov/_files/PensionTransparencyTrifold.pdf