The Honorable Devin Nunes
United States House of Representatives
1013 Longworth House Office Building
Washington, DC 20515
Dear Representative Nunes:
On behalf of the 362,000-member National Taxpayers Union (NTU), I write in strong support of your “Public Employee Pension Transparency Act” (PEPTA), which would provide vital financial transparency for state and local government employee pension plans.
Pension shortfalls, whose fundamental causes predated the economic downturn of 2008, have left many states strapped for cash and questioning how best to remedy the problem. Estimates of the total unfunded liabilities across all 50 states and their municipalities are staggering. Two studies referenced in your legislation put the combined total at roughly $3.8 trillion, although other estimates range from $1 trillion and upwards. This wide variance can be attributed in part to obscure government accounting rules, particularly relating to asset and liability valuations. Because of uneven disclosure requirements, governments are at grave risk of jeopardizing retirement packages for 27 million active or retired employees and their families, as well as putting taxpayers on the hook for unaffordable payouts.
By denying federal tax benefits for bonds unless state and local governments file annual reports on their employee pension plans, your legislation would encourage administrators and lawmakers to confront the grim realities of massive unfunded liabilities. No longer should we allow taxpayers to be kept in the dark due to inaccurate or incomplete reporting on pensions. The bill’s requirements for extensive disclosure of assets, liabilities, and projections of future performance will more thoroughly inform the public about the true cost of pension benefits and allow for a sober-minded assessment of potential solutions. Refinements to this year’s legislation include simplified strictures for pension plan actuarial assumptions, the addition of “current cost” in disclosure rules, and further clarification of “current liability” definitions. The result is an even more transparent and consistent assessment of taxpayer-funded pension plans’ health.
This bill would provide an important bulwark against a federal bailout of failing state pension systems. Furthermore, by bringing data into the light of day, the Public Employee Pension Transparency Act will encourage honest governance as states and localities tackle their pension challenges. We commend your efforts to increase accountability within these retirement plans, for the sake of both beneficiaries and taxpayers. Your legislation has been developed over several sessions, with careful forethought, and its passage is long overdue. Roll call votes on PEPTA will be heavily weighted in NTU’s annual Rating of Congress.
Sincerely,
Pete SeppExecutive Vice President