The U.S. Chamber of Commerce announced Wednesday its support for the Public Employee Pension Transparency Act. The Act, H.R. 567, would require state and local government pension sponsors to report plans' funded status to the Secretary of the Treasury, and to make that information publically available via a searchable website.
The Act was introduced by Reps. Devin Nunes, R-Calif.; Paul Ryan, R-Wis.; Darrell Issa, R-Calif.; and Lamar Smith, R-Texas. Sens. Richard Burr, R-N.C., and John Thune, R-S.D., are sponsoring a companion bill in the Senate.
“The unfunded liabilities of state and local government pension plans has reached crisis proportions with no solution in sight,” Randel Johnson, senior vice president of Labor, Immigration, and Employee Benefits for the U.S. Chamber said at a press conference Wednesday. Johnson said it was "hardly fair" that the private sector is held to strict funding requirements under ERISA, but that the public sector "often remains free to promise increasing levels of benefits without properly funding those benefits for the future."
A February 2010 report by The Pew Center on the States found a $1 trillion gap between states' promises to retirees, and the amount actually allocated for those promises. The report also found that in 2000, more than half of states had fully funded pension systems; by 2006, only six did, and in 2008, just Florida, New York, Washington andWisconsinhad fully funded pension systems.
“This legislation will at least require that we have an accurate accounting of the degree of underfunding so that meaningful solutions can be explored, whether at the state or local levels,” Johnson added.
The Free Enterprise Nation, a non-partisan member-based organization representing private sector businesses, also announced its support of the Act Wednesday. James MacDougald, president and founder of the organization called the Act "extremely important legislation that is in the best interest of both the taxpayer and the public sector employee," in a press release.
"It will establish a sorely-needed enforcement mechanism requiring public sector pension funds to disclose their real financial liabilities," he said.
Text of the bill was not available as of press time. The bill was previously introduced to the 111th Congress by Nunes on Dec. 2, 2010. It was referred to the House Committee on Ways and Means, but never became law.
In its previous incarnation, H.R. 6484, the bill met with opposition from various organizations. On Dec. 8, 2010, the National Association of State Retirement Administrators along with the National Association of Counties, the United States Conference of Mayors, the National League of Cities, the International City/County Management Association, the National Association of State Auditors Comptrollers and Treasurers, the Government Finance Officers Association, the International Personnel Management Association for Human Resources, and the National Council on Teacher Retirement released a statement that said the bill "would mandate inappropriate federal reporting requirements on state and local governments" regarding the costs of their pension plans. Those organizations further objected to the federal government's intrusion into "areas that are the financial responsibility of, and have thus been historically regulated by, the states and/or localities."
Among the other complaints those organizations had against the bill proposed in December were that it conflicted with existing accounting standards and increased state and local government costs. Furthermore, they argued, state and local governments "are not seeking a so-called federal 'bailout' for their retirement systems."
"State and local pension systems collectively have pre-funded nearly four-fifths of their future pension liabilities – even when accounting for the steep losses in 2008 and earlier this decade," according to the statement, adding that, "Inaccurate and inflammatory descriptions of the state of public pensions and unnecessary calls for federal intervention are unwarranted and only serve to confuse the public and unduly alarm state and local government retirees." The organizations urged Congress to turn their attentions to Americans who lacked sufficient savings or protections to meet their retirement needs.
On Jan. 3, the Teamsters for a Democratic Union released a statement calling the bill a "shot fired at the pensions of millions of American families," and adding that it would "dramatically increase state and municipal debt by forcing governments to exaggerate the money needed to finance public employee pensions."