N.C. Taxpayers to Bailout State Employee Pensions

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.

Source:  http://www.carolinajournal.com/exclusives/display_exclusive.html?id=8007