Submitted in the House of Representatives on March 21, 2016 and assigned to the Ways and Means Committee (read more)
The Congress finds the following: (1) Pursuant to clauses 1 and 3 of section 8 of article I of the Constitution of the United States, the Congress has the authority to condition the continuation of certain specified Federal tax benefits upon State or local government employee pension benefit plans provision of meaningful disclosure under section 4980J of the Internal Revenue Code of 1986, as added by this Act. (read full bill text)
Public pension accounting should ideally provide citizens and government officials with a sense of how indebted taxpayers are to state and local government employees. However, the government accounting standards currently used allow states to use procedures that severely understate their liabilities. (read more)
113th Congress: H.R. 1628
112th Congress: H.R. 567
111th Congress: H.R. 6484
National Taxpayers Union
Americans for Tax Reform
American Conservative Union
Citizens Against Government Waste
Americans for Limited Government
Americans for Prosperity
U.S. Chamber of Commerce
Free Enterprise Nation
National Federation of Independent Business
Congressional Budget Office
A Congressional Budget Office (CBO) report supports the conclusions and testimony made by the majority of Ways and Means panel witnesses on May 5, 2011. According to CBO, fair valuation (such as the reforms included in the Nunes bill) offers a more complete picture and transparent measure of the cost of pension obligations. (read the CBO report)
Subcommittee on Oversight Hearing, 112th Congress (H.R. 567)
Welcome to this morning's Oversight Subcommittee hearing on the Transparency and Funding Levels of State and Local Pension Plans. According to the Federal, State, and local levels of government, our country faces a growing burden of public debt. Too often, governments have deferred difficult choices by pushing obligations off into the future without responsibly saving for the day when those obligations are due. (hearing transcript) (video)
2011 Press Packet
Bill information, statements of support, and news articles related to the PEPTA bill from the 112th Congress, H.R. 567 (download the 2011 Press Packet)
In the News
Why Pensions' Last Defense Is Eroding, The Wall Street Journal (subscription required)
Long-term returns for U.S. public pensions are expected to drop to the lowest levels ever recorded, portending deeper pain for states and cities as a $1 trillion funding gap widens.
Congress Must Address Public Pensions Plan Unfunding, Pensions & Investments
While new Governmental Accounting Standards Board rules are making state and local governments report more accurately the amount of their pension debt, Rep. Devin Nunes, R-Calif., believes more needs to be done. On March 21, he reintroduced a bill he sponsored in 2011 that would bring fiscal accountability and transparency to the public pension system.
GOP Lawmaker Targets State Pension Transparency with New Bill, The Hill
Several states have recently struggled with massive pension liabilities. Illinois is facing a $110 billion pension shortfall, while New Jersey faces a burden of up to $113 billion. Public pension liabilities also contributed to Puerto Rico's $70 billion debt crisis. The commonwealth has already defaulted on debt payments, and House Speaker Paul Ryan (R-Wis.) has given lawmakers until the end of March to find a solution.
US Faces 'Disastrous' $3.4tn Pension Funding Hole, The Financial Times (subscription required)
Large pension shortfalls have already played a role in driving several US cities, including Detroit in Michigan and San Bernardino in California, to file for bankruptcy. The fear is other cities will soon become insolvent due to the size of their pension deficits.
US Public Pension System Facing $3T Funding Gap: Report, The Hill
The nation's public pension system is facing a $3.4 trillion funding hole that may force cities and states to either cut spending or raise taxes to cover future shortfalls.
Shining Light on Government Pensions, Bankrate
The actuaries have taken notice of the Public Employee Pension Transparency Act, re-introduced March 21 in the U.S. House by Rep. Devin Nunes, R-Calif. Among other things, the bill would prevent states and cities from issuing tax-exempt bonds without publicly disclosing the cost of their pension plans and estimating their ability to pay those obligations. The legislation would also prohibit bailouts of state or local pension obligations by the federal government.
Bill Seeks to Tie Municipal Borrowing Power to Public Pension Disclosure, The New York Times
This time, the bill may also gain momentum from the changing circumstances — Stockton’s pension fight is out in the open, for instance, and certain other cities, like Detroit, are clearly struggling more than ever with retirement benefit costs. Federal regulators recently accused Illinois of securities fraud for issuing what they said was misleading information about its pension system.
Perhaps most important, in Washington the search is on for ways to reduce the federal deficit.
Public Pension Hygiene Act, The Wall Street Journal
We're so accustomed to misnamed legislation like the Employee Free Choice Act (card check) that it's hard to believe that a welcome proposal called the Public Employee Pension Transparency Act describes what it actually purports to do. To wit, prohibit public pension bailouts by the federal government and expose the $3.5 trillion of unfunded public pension liabilities that local and state governments have obscured.
States of Crisis, The Weekly Standard
There are also things the federal government can do to make states better bookkeepers. Congressman Devin Nunes of California proposes shining a light on state and local governments’ defined-benefit pension plans. His Public Employee Pension Transparency Act would give us a sense of the true cost and disposition of pension funds. Municipalities would have to reveal their (currently hard to find) financial data and disclose their actuarial assumptions. And since state pension fund accounting makes Enron look like a paragon of fiduciary responsibility, the bill would discourage further binges.
Public Pensions and Your Right to Know, The Washington Examiner
Nunes' bill, in addition to barring future pension bailouts by federal taxpayers, simply adds a requirement for state and local governments that want to issue tax-exempt bonds. Unless they hand over complete information on the health of their pension funds to the U.S. Treasury Department, they won't qualify for the treasured tax exemption. You want to borrow money and build that new school or town square? Then show us your books.
Today's Power Play, FoxNews
The danger is that bad investments in places like California and New York, where political mischief in selecting investments has been alleged, could leave states unable to fund their lavish obligations to retirees. Nunes, Ryan and Issa are suggesting that governments that want the right to float bonds in order to borrow money ought to have to disclose their books.
Pension Reality Check, The Washington Post
Getting states, counties and cities back on a sustainable budget path is primarily their own responsibility. But federal policies can help - or hurt. At the moment, Congress is considering one of each type. On the helpful side, a trio of Republican members of the House - Paul Ryan (Wis.), Darrell Issa (Calif.) and Devin Nunes (Calif.) - have proposed a bill that would require all state and local governments that issue federally tax-exempt bonds to file accurate annual reports of their pension liabilities with the Treasury Department.
Expose the Pension Mess, American Thinker
An exemplary bill introduced by Reps. Devin Nunes (R-CA), Paul Ryan (R-WI), and Darrell Issa (R-CA) would take away the federal tax-exempt status for bonds from any state or municipality that doesn't report openly its pension-fund liabilities. This bill would help provide accounting transparency and honesty in state and municipal bond sales to consumers, just as Sarbanes-Oxley is intended for publicly traded corporate stock sales.
A Remedy for Beggar States, The Washington Post (Editorial by George F. Will)
Corporate pension funds are heavily regulated, including pre-funding requirements. A federal agency, the Pension Benefit Guaranty Corp., copes with insolvent ones. By requiring transparency, the government gave the private sector an incentive to move to defined contributions from defined-benefit plans, which are now primarily luxuries enjoyed by public employees. Less candor, realism and pre-funding are required of state and municipal governments regarding their pension plans. Nunes's bill would require them to disclose the size of their pension liabilities - and the often-dreamy assumptions behind the calculations.