Shady accounting practices have colored state
employee pensions. The Governmental
Accounting Standards Board allowed states to use fuzzy math in order to inflate
the true numbers. The end result is a
budget shortfall that will cost every taxpayer in North Carolina. Carolina Journal reported on this earlier
this year:
Why the shortfall? As Carolina
Journal reported in March, Novy-Marx, Rauh, and other critics of public pension
accounting say the Governmental Accounting Standards Board — the panel that
evaluates public pension solvency — has exacerbated the problem. Critics say
the GASB allows public plans to understate their true long-term liabilities by
using inflated rates of return; meantime, private pension systems must use more
conservative rates to estimate their solvency.
And how much could this cost the citizens of North
Carolina?
RALEIGH — A recent
study on public pension liabilities concludes that North Carolina would need to
raise taxes on every household by $764 for each of the next 30 years just to
fulfill its promises to retired state workers — and despite that startling
conclusion, the Tar Heel State’s public pension system is in better shape than
many of its peers.
I believe that public
employees should experience the vicissitudes of the free market, just like
everyone else. There are no guarantees
in life, as anyone in the private sector can testify. And that should apply to government employees
as well.
No comments:
Post a Comment