Everything old is new again with the reintroduction of the Public Employee Pension Transparency Act (PEPTA), which seeks to compel state and local governments to publish their pension liabilities—or be penalized if they fail.
The bill, introduced by Rep. Devin Nunes, R-California, would compel state and local governments to publish their pension liabilities on a searchable website, and deprive them of their ability to offer tax-free bonds if they fail to do so.
Citing a “lack of meaningful disclosure” about the actual state of pension liabilities, the bill—variations of which were previously submitted by Nunes in 2010 and 2013—would require that state and local governments would be required to file a report for each plan year that would include a range of information.
Included would be a schedule of funding status; a schedule of contributions by the plan sponsor; “[a]lternative projections … for each of the next 60 plan years following the plan year of the cash flows associated with the current liability, together with a statement of the assumptions used in connection with such projections”; actuarial assumptions used for the plan year; a breakdown of plan participants according to their status (active, retired, receiving benefits); “[a] statement of the plan’s investment returns, including the rate of return, for the plan year and the 5 preceding plan years”; and how the sponsor “expects to eliminate any unfunded current liability that may exist for the plan year and the extent to which the plan sponsor has followed the plan’s funding policy for each of the preceding 5 plan years.”
Supplementary reports would also be required. Opposition to the bill on the part of numerous state and local government associations has already surfaced, on the grounds that, according to the International City/County Management Association’s website, “Such legislation would mandate a costly, duplicative, and complex layer of new federal reporting on top of existing state and local accounting and reporting requirements.”
They are also, of course, opposed to the threat to bond issuance the bill proposes for noncompliance.
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