Posted by
John R. LaPlante on Thursday, October 19, 2006 2:57:29 PM
Government programs require government workers. Workers, of course, must be compensated. One overlooked part of government spending is public employee benefits. Are the benefits granted by taxpayers fair to workers? And more importantly, are they fair to taxpayers?
The Boston-based Pioneer Institute is out with some reviews of public employee benefit programs. (All are in PDF format, so break out your copy of Adobe Acrobat Reader.) Public Pensions: Unfair to State Employees, Unfair to Taxpayers looks at the plans that serve 275,000-plus active and retired workers. Ken Ardon finds that the plans are “not overly generous for typical employees,” but they can be improved in several ways. He points out that ambiguities, exceptions, and loopholes open the way for abuse and obscure transparency. In a Sarbanes-Oxley world, that’s not good.
In Leaving Money on the Table, Ardon looks at the 106 public pension plans in Massachusetts. He recommends that underperforming funds be merged into PRIT, a fund that has a record of superior returns.
The Elephant in the Room discusses what may be the most serious public finance problem you’ve never heard of: GASB 45. What’s GASB 45? An accounting standard that, if adhered to by governments, will make the costs of retiree health care benefits more obvious. Right now, these benefits are estimated to be a $1 trillion liability. Lawmakers and the public must ask: should these liabilities be funded, reduced, or eliminated?