Congressman Nunes Introduces Public Pensions Bill
PEPTA would encourage transparency, prevent bailouts of state and local pensions
Congressman Devin Nunes (CA-22) today introduced a bill in the House of Representatives to encourage transparency in state and local pension systems and to prevent federal bailouts of insolvent pension plans.
State and local pension systems may seem fiscally secure, but that is often a façade created by assuming unrealistic rates of returns on investments and by using other accounting tricks. In fact, a forthcoming report from Stanford Professor of Finance Joshua Rauh estimates that the fiscal hole for state and municipal public employee pension plans is an astounding $3.4 trillion.
The Public Employee Pension Transparency Act, known as “PEPTA,” would require state and local government pension plans to disclose their liabilities in a uniform and transparent manner based on widely accepted accounting principles. This information would be made available by the Secretary of the Treasury to the public through a searchable website. State and local governments that fail to disclose the requested information would have their federal tax-exempt bonding authority eliminated. The bill also prohibits the federal government from bailing out state and local pension systems.
“Many state and local pension funds are hiding vast debts through accounting gimmicks,” said Congressman Nunes. “The taxpayers—who will be forced to pay off these enormous debts if pension systems go insolvent—have a right to know the true condition of these pension plans, and the systems’ participants need to know how secure their benefits are. The fact that public pension debt helped spur the Puerto Rican debt crisis should serve as a warning of the devastating effects that can result from underfunded pension systems.”