Political Class Manipulating Public Employees’ Pension Fund Statistics
Editorial by Max Patterson
Two foundations closely aligned with business and Wall Street interests have stepped up attacks against public employee pension funds. They know the legislative session is right around the corner. Lawmakers and the general public should continue to view them with suspicion.
The Texas Public Policy Foundation recently took aim at pension funds’ unfunded liabilities, a measure of benefit promises to current assets. The TPPF sought cover of Pension Review Board reports to lump together 93 pension funds, ranging in size from $2 million to $133 billion, to produce a headline number of $61 billion. The size is meant to stagger, until put in proper context.
The TPPF failed to mention that 42 pension funds had decreases in those liabilities and 23 more had meager single digit increases. Excluding six of the largest state and local pension funds, the total increase for the 87 remaining systems amounted to only $39 million, which is hardly an unmanageable figure. In fact, considering their billions in combined assets, it is miniscule. Nor did the report not include calculations for latest investment returns, most of which will be positive for a good stock market year in 2016. Those returns will not be in PRB stats until early 2017.
Piling on with more false news, the Laura and John Arnold Foundation added to their non-constructive October criticisms of Dallas with a November assault on Austin’s pension funds. The LJAF mischaracterized the Austin systems’ highly-liquid portfolio holdings as “hard-to-value” and “illiquid,” and excluded substantial utility transfers from its calculation of pension fund liabilities to city general fund revenue.
We could go on with more examples of these groups’ attempts at sleight of hand, but we do not want to continue with more misinformation. We are sure the LJAF is already cooking up some other mischaracterizations for another Texas city before session begins. Do not be fooled when those come out. Everything they produce deserves high doses of skepticism.
Regardless of these groups’ worst efforts to say otherwise, public employee pension funds continue to serve the public’s best interests. Their traditional defined retirement benefits keep hard-working teachers, firefighters, police, and state and municipal employees on the job for decades. They keep cities moving. They keep training costs down. The benefits they deliver are in fact only modest promises after decades of moderate public sector salaries.
As we are seeing in Dallas and Houston today, public employees are willing to share responsibility, in the form of benefits cuts, for problems they did not create, in order to be part of a solution. Just like the work they have performed for their great cities, they keep the best interests of their fellow citizens in mind. It’s too bad the same cannot be said of those who create these outlandish reports.
Max Patterson is executive director of the Texas Association of Public Employee Systems, representing more than 80 retirement plans for police, firefighters, state and municipal employees, and teachers.